NEWS

An open letter from Ofgem shares concerns that suppliers aren’t doing enough to combat rising incidences of energy theft. 

Energy theft is on the rise in the UK. There are more and more incidences of people tampering with their gas or electricity meters to try and get around paying for their energy. Ofgem is not happy with this development, as energy theft has adverse effects across the industry. As a result, they have written an open letter to suppliers reminding them of their obligations to combat energy theft.

In this article, we’ll look in more depth at energy theft and how the industry is supposed to reduce theft numbers.

Energy theft increasing

There has been a significant uptick in reports of energy theft to Crimestoppers. In the twelve months leading up to April 2022, the number of incidences reported was 8,000. In the twelve months leading up to April 2023, it rose to 12,000. That’s a 50% increase. 

Why is this happening? Experts believe that high inflation, interest rates and living costs mean people have less money in their pockets, so they’ll resort to increasingly desperate measures to power and heat their homes. 

The problem with energy theft is that it’s not a victimless crime. As well as being very dangerous for the thief attempting to break their energy meter (it can cause electrocution or gas leaks), it means that regular law-abiding customers end up paying for the energy costs of the thieves in the form of higher bills. 

From a health and safety standpoint, gas leaks can turn a room into a deathtrap, while tampered electricity meters can cause injury and start fires. From a financial point of view, the cost of energy theft in Great Britain is estimated to be between £830 million and £1.388 billion annually. That’s an extra £29-48 on the annual bill of every domestic energy consumer.

As a result, it’s in everybody’s interests to stop energy theft. But what can be done?

Suppliers’ obligations to combat energy theft

As part of their contracts with Ofgem, energy suppliers are expected to act on energy theft, thereby reducing bills for paying customers. Here are the measures they’re obligated to take:

• Detection – Suppliers should implement effective systems and processes to detect energy theft, including using advanced technologies and data analysis
• Investigation – Suppliers should gather evidence on energy thieves to establish whether the theft was a deliberate act or negligence
• Reporting – Suppliers must report energy theft detection numbers, which are measured targets as part of the Retail Energy Code (REC)

Poor performance

In Ofgem’s opinion, many suppliers have not fulfilled their energy theft obligations. In the open letter, the Deputy Director of Retail Systems and Processes expresses her disappointment. 

In 2022/23, suppliers detected just 16,581 incidences of energy theft against a target of 41,000. That’s only a 40% hit rate.

Ofgem wants to see greater effort not just to fulfil the minimum obligations, but to go the extra mile to protect their paying customers from higher energy bills. Ofgem plans to monitor energy theft numbers more strictly and enforce penalties for suppliers not meeting their requirements. Ofgem will also examine the current regulations around energy theft to see if strengthening them could improve suppliers’ performance.

Aiming higher

For the sake of suppliers, regulators and, above all, customers, it would be great to reduce incidences of energy theft. Energy theft is dangerous for the person doing it and financially disadvantageous to everyone else. It’s hard to detect, but with investment in technology, we hope suppliers can raise their hit rates. 

We’ll keep an eye on the numbers and look out for improvements.