How we reach out to customers who aren't paying

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Paying for the energy you use is a responsibility. We know that sometimes, life throws unexpected things at you that can make paying difficult, and when this happens, we’re here to help.

Particularly now, with the costs of living so high, we know more people are struggling than ever. There’s help available: the government’s much-needed package of support will have a huge impact, and we’ve created our own dedicated support schemes for those who need it most via our £30 million Octo Assist fund.

We think hard about how to support customers who struggle to pay. If you ever need support or advice, all you need to do is ask.

There is a tiny percentage of customers who don’t pay their bills. A few customers switch to us, and then never ever get in contact with us again or pay us a penny, despite using energy as normal. The biggest problem with this? We have to build customer debt into our business costs – which means when people don’t pay, other customers have to ‘pick up the tab’.

If even 1% of our customers chose never to pay, that’d work out to about £25 extra on every other customers’ bills each year to cover the cost.

I’m going to take you through the whole process we go through to reach the small group of customers who don’t pay for what they use – and let you know the reasoning behind it, too.

Most of what you pay for your energy bill doesn’t go directly to your energy company (us).

A visual breakdown showing the different costs involved in an energy tariff – 70.8% wholesale energy, 10.5% transmission, 4.3% environmental and social obligations, 2.3% 3rd party metering,  7.3% staff, technology and business costs, 4.5% VAT

A visual breakdown showing the different costs involved in an energy tariff

A big chunk of your bill goes to pay for energy, wholesale, from the people who generate it. Then there’s a wedge which goes to pay the companies who deliver the energy to you through pipes, wires and your meter. Then we have to pay various government obligations.

Another big cost is something energy companies call ‘bad debt’ – i.e. assuming that some of their customers will underpay, or even never pay their bills. This estimated cost is added up, and added to the costs that we have to factor in as a business. All energy companies do this, and it can run into hundreds of millions of pounds a year for the biggest ones.

Energy retailers don’t make lots of profit. In fact: we work on incredibly tight margins. So much so that 29 energy suppliers went bust in 2021 when wholesale energy costs skyrocketed. Our technology and team means we run an incredibly efficient business at Octopus, which means we can keep our prices as low as possible for customers, whilst still covering our costs. In the crisis we absorbed £150 million to keep bills lower for everyone, and we’ll spend another £40 million to keep everyone’s standing charges lower this Winter.

But we don’t think it’s fair that some customers have to pick up the tab for other people’s ‘bad debt’, which is why we have an extensive process in place to reach out to customers who aren’t paying. We try to minimise our bad debt as much as possible so we can pass on very little of this cost to customers. It’s our responsibility to do this. Not only does it bring tariff prices down, but it makes our business run better, so we can keep taking care of customers and our team in the best way possible.

If you’re struggling with your bills, there are many ways we can help. Please get in touch.

We've set up a £15 million Octo Assist Fund to help those worried about paying for their energy in the crisis. You can access our Financial Support form here – a quick and simple online tool which asks you a series of questions about your financial situation.

We can offer a number of support options based on circumstances and need, including access to existing schemes, monetary support from the fund, or a loan of a thermal imagery camera to find heat leaks at home. If you want to know more about what to do in the face of rising energy prices, it's worth visiting our dedicated Energy Crisis information hub.

If ever you're struggling to pay, no matter your circumstances, our friendly team are always here, on the phone or on email, to help you manage your bills – we've written about how we can help when you're struggling to pay here.

As long as you work together with us, we won't disconnect your power.

But we have a duty to all of our customers to make sure that we ask everyone to pay their bills. And those people who decide that they don’t have to pay, we carefully contact to make sure other customers don’t end up having to pick up the tab.

So, how do we do our best to make sure customers are paying for their energy?

  1. When you switch to us, we ask you to set up a direct debit (or arrange another way to pay, like via bank transfer or online card payment when you receive a bill).
  2. If we don’t hear from you at all after that, and you’re beginning to fall behind on your payments, we’ll send regular contacts to you in a few different ways.
  3. We’ll send emails, SMS messages, and letters letting you know you’re behind on your payments, explaining how we can help, and asking you to get in touch.
  4. If we don’t get any response, we’ll try phoning up a few times alongside more written communications, again, stressing that we are here to help and to get in touch. We make sure to outline some of the options we might need to take if we still don’t hear back.
    For instance, we will let credit reference agencies know if payments are overdue – we’re actually obligated to report this information.
  5. After trying to reach out all these ways with no response, we may take further action. That could be passing your details onto a carefully selected debt collection partner, who’ll work on getting in touch to recover payments on our behalf. They might do this by sending more written communications, or by sending someone round to discuss repayment options.
    We might also install a prepayment meter at your property to help you manage your energy better.

At any point in this process, you can contact our team to discuss your circumstances, seek advice on saving energy, government aid that might be available, support from our dedicated Octo Assist fund, or help organising a payment plan that works for you.

Coming to your home to ask you to pay is very much a last resort – but we do it in cases where customers often owe us thousands of pounds, have continuously not paid, and have been contacted by email, letter, phone call and text many times.

We had one customer who had never paid any of his bills. He told us he was living in poverty, and stopped communicating. One of our Directors went to his house, and phoned him, it rang internationally - he was on holiday in Mauritius.

The majority of people pay their bills, and our customers are amazing, even in these incredibly tough times people will talk to us, ask for advice, and pay what they can. That makes it even more important that we can help those who need it by making sure everyone pays what they can.

So please, if you are struggling with your bills – get in touch with us. But if people wilfully decide that they don’t need to pay, if they avoid the responsibilities that we all have, we can’t just let it go or other customers - those who abide by the rules - end up paying instead.

Published on 27th September 2022 by:

image of Shoaib Nasir

Shoaib Nasir

Customer Credit Manager

Hey I'm Constantine, welcome to Octopus Energy!