Debt Flagging Review - CRU Ireland · for raising a debt flag. A further review of debt flagging was carried out in 2016, in which it was decided not to change the structure or values

An Coimisiún um Rialáil Fóntas Commission for Regulation of Utilities

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An Coimisiún um Rialáil Fóntas

Commission for Regulation of Utilities

Debt Flagging Review

Consultation Paper

Reference: CRU 18255 Date

Published: 05/12/2018

Closing

Date: 04/02/2019

www.cru.ie


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Executive Summary

Debt flagging has been operational in both the electricity and gas markets since October 2011. A

debt flag is raised if a customer who is in debt with their supplier (above a set amount and over a

specific length of time) chooses to switch to another supplier. The losing supplier will raise a debt

flag to the new supplier, who can then accept or reject the customer who requested to switch.

The purpose of debt flagging is to reduce the levels of what is called debt hopping. Debt hoping

occurs when a customer in debt chooses to switch supplier to avoid paying the debt they owe

their previous supplier. This practice impacts customers by raising energy prices as the unpaid

debt gets spread across all customers. Additionally, for those customers in debt, it makes their

situation worse by building up debts with several suppliers and makes it more difficult to manage

in the long run.

The process of debt flagging was reviewed in 2013, resulting in revised thresholds and timings

for raising a debt flag. A further review of debt flagging was carried out in 2016, in which it was

decided not to change the structure or values associated with debt flagging. The CRU has

decided that a new review of the debt flagging thresholds is required due to changes in the

market over time. That is the purpose of this consultation.

This consultation on the debt flagging process considers the amount of debt required and the

timings for raising a debt flag. The amount of debt required for raising a debt flag is based upon

the average energy bill. The present level was decided in 2013. Since then the average bill value

has changed because of changes in tariff prices and revised average annual consumption

(customers are now using less energy on average). The review of this has shown that a

customer’s average annual bill is lower than it was in 2013. Following the approach taken in 2013

(of basing the amount of debt required on the average energy bill) the CRU is considering a

reduction to the current amount of debt required for raising a debt flag.

The timing for being able to raise a debt flag has been reviewed and the CRU does not consider

that there is any need for change. The present timings are based upon standard credit

management systems (for billing) normally operating in 30-day cycles. The CRU considers it is

sensible to continue aligning the timings to the operation timings of the credit management

systems.

The updated debt flag values for consultation are outlined in the table below.

Market Sector Current Threshold Proposed Threshold

Domestic ≥ € 225 for

> 60 days from due ≥ € 200 or

> 60 days from due

Electricity and (LV-NMD/DG5)

≥ € 600 for > 30 days from due

≥ € 500 or > 30 days from due

Medium Sized Business

≥ € 1,200 for > 30 days from due

≥ € 1,000 or > 30 days from due

In addition to the existing debt flagging process, the introduction of a new flag is proposed in this

consultation – a Revenue Protection Flag (RP Flag). An RP Flag is being proposed to address

energy theft due to meter tampering. Meter tampering occurs when an individual interferes with a


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meter to limit or stop its recording of energy usage. A meter can be tampered with by the

individual who is consuming the energy or an individual paid or asked to do so. A tampered

meter allows the customer to consume energy without it being recorded to avoid paying for the

energy they use. This is essentially energy theft.

Meter tampering is illegal and a serious public safety concern. Tampering with a meter puts the

individual at risk, alongside the safety their neighbours and public. Additionally, the theft of

energy comes at a cost to all customers. When energy is consumed but not accounted for

(through metering) the cost of that energy is spread across all customers, raising energy prices

for those customers who pay their bills.

Meter tampering is considered to always be deliberate, however, it is possible that some

customers could inadvertently benefit from it. For example, an individual could move into a

property with a tampered meter, resulting in the individual unintentionally using energy without

paying for it. Nonetheless, we consider that it is fair and reasonable that that a customer should

pay for the actual energy they have used. These individuals will therefore still be liable to pay the

debt they owe because of energy used and not paid for due to meter tampering.

The CRU is assessing potential measures that could be implemented to discourage meter

tampering. The CRU considers the potential option of introducing an RP Flag could be an

appropriate and effective tool to achieve this an is seeking responses on such. An RP Flag would

operate in a similar manner to a Debt Flag. If a customer who has debt associated with meter

tampering chooses to switch supplier, the loosing supplier can raise an RP flag to the new

supplier. The new supplier upon receipt of an RP flag will then be in the position to either: accept

or reject the new customer based upon their debt from meter tampering. If the new supplier

chooses not to accept the customer, then that customer will remain with their existing supplier.

The CRU considers that debt associated with meter tampering should be treated differently to

other forms of debt in order to discourage meter tampering due to the safety issues and costs it

puts on all customers. It is for that reason that the CRU is proposing that revenue protection gets

its own flag - an RP Flag separate to a Debt Flag. The CRU is seeking responses upon whether

a separate flag (RP Flag) should be introduced to discourage meter tampering.

If the CRU introduces an RP Flag into the market, the structure of it (in terms of applicability,

thresholds and timings) would have to be decided upon. In considering the RP Flag proposal the

CRU has suggested a proposed structure on which we are seeking feedback.1

The CRU is proposing to introduce RP Flagging to both the electricity and gas market. Within

each market an RP flag can be raised for both domestic and non-domestic customers as it is

recognised that meter tampering has the same safety concerns and costs implications for

customers regardless of whether it is from a domestic or non-domestic customer.

The CRU is proposing to align the minimum amount of meter tampering debt to raise an RP Flag

to that of the debt flag, this is for simplicity for both customers and suppliers. One of the major

concerns in meter tampering is that the cost of debt hopping is spread across those customers

who pay their bills. Customers with a debt below the thresholds do not have as big of a cost

1 Note the CRU is aware that these proposals will only be applicable if it is decided to introduce an RP Flag.


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impact. This approach is therefore considered reasonable, whilst still being of a high enough

value to act as a deterrent to meter tampering and debt hopping.

The CRU is proposing that suppliers would be able to raise an RP Flag against a customer as

soon as they have confirmation from the network company that meter tampering occurred. This

is because the debt associated with tampering builds from the time the tampering takes place. It

can be a considerable amount of time before the tampering is discovered and the debt applied to

the customer’s account. This means that the debt has been owed much longer than the minimum

time period set out for a debt flag.

Once it is applied to the customer’s account, they have the opportunity to pay off the debt

associated with meter tampering. If they pay this off in full then the supplier would no longer be

able to raise an RP Flag against the customer. The CRU is proposing that a supplier would only

be able to raise a debt flag against a customer for up to one year after they receive confirmation

that the customers meter was tampered with. If the customer still has debt related to meter

tampering (above the threshold) one year after the tampering was confirmed to the supplier, an

RP flag would no longer be able to be raised against them. However, that customer could have a

debt flag raised against them.

The CRU’s proposal upon the introduction of an RP Flag and the processes around it is outlined

in the table below.

Parameter Outline

Applicability - Electricity and gas market

- Domestic and Non-domestic

Threshold Value

- Aligned with that of a Debt Flag Domestic ≥ € 200

Electricity and (LV-NMD/DG5) ≥ € 500 Medium Sized Business ≥ € 1,000

Timings

- No minimum time threshold (can raise an RP Flag as soon as they receive an RP read)

- Once the debt associated with meter tampering is paid an RP Flag cannot be raised

- An RP flag can only be raised against a customer for up to a year after meter tampering is confirmed

Alternative - Do not introduce an additional flag (RP Flag) and rely upon the

Debt Flag as a suitable deterrent to meter tampering.

The CRU is further seeking any responses upon alternative measures that could be introduced to

address the rate of meter tampering.

Responses to this consultation are invited by 04 February 2019.


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Public Impact Statement

The CRU approved the introduction of Debt Flagging following concerns that some customers

were changing supplier to avoid paying their energy debt, or to avoid disconnection. This practice

is known as ‘debt hopping’ and can also occur with customers who build up debts associated

with meter tampering. Debt hopping unfairly increases energy costs for all customers (including

those customers who pay their bills). For those customers in debt, it makes their situation worse

by building up debts with a number of suppliers making it more difficult to manage in the long run.

Tampering with a meter further poses safety concerns for both the individual and the public.

The CRU considers that flags (in the form of a Debt and the proposed Revenue Protection Flag)

are an effective tool to address the instances of energy debt and energy theft in the market. It is

important that the processes around these measures are appropriate for the current energy

market to remain an effective tool. At the same time, the process of flagging needs to be fair to

ensure it does not act as a barrier to a customer’s ability to switch suppler without due cause.

This paper seeks to address this, proposing updates to the flagging process where the CRU

consider it appropriate.


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Table of Contents

Glossary of Terms and Abbreviations .................................................................... 1

1. Introduction ........................................................................................................ 0

1.1 Background ........................................................................................................................ 0

1.1.1 Debt Flagging ............................................................................................................ 0

1.1.2 Revenue Protection Flag .......................................................................................... 1

1.1.3 Purpose of this Paper................................................................................................ 1

1.1.4 Related Documents ................................................................................................... 2

1.1.5 Structure of Paper ..................................................................................................... 2

1.1.6 Responding to this Consultation ............................................................................... 2

2. Findings and Proposals .................................................................................... 4

2.1 Debt Flagging ..................................................................................................................... 4

2.1.1 Review of the Mechanism ......................................................................................... 4

2.1.2 Threshold Value ........................................................................................................ 7

2.1.3 Timing ........................................................................................................................ 9

2.1.4 Unmetered connections ............................................................................................ 9

2.1.5 Debt Blocking .......................................................................................................... 10

2.1.6 Debt Flagging Proposals ......................................................................................... 10

2.2 Revenue Protection Flag ................................................................................................ 11

2.1.7 Applicability ............................................................................................................. 11

2.1.8 Threshold Value ...................................................................................................... 11

2.1.9 Timings .................................................................................................................... 12

2.1.10 RP Flag Proposals .................................................................................................. 15

3. Timeline for Response .................................................................................... 16

Annex 1 ......................................................................................................................................... 17


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Glossary of Terms and Abbreviations

Abbreviation or Term

Definition or Meaning

CRU Commission for Regulation of Utilities

CoS Change of Supplier

DM Daily Metered

DUoS Distribution Use of System

ESBN ESB Networks

GNI Gas Networks Ireland

KWH Kilowatt Hour

LV Low Voltage

MPRN Meter Point Reference Number – a unique 11 digit number assigned to

each electricity connection and meter.

MWH Megawatt Hour

NDM Non-Daily Metered

NPA Non-Payment of Accounts

PAYG Pay As You Go

RP Revenue Protection


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1. Introduction

1.1 Background

1.1.1 Debt Flagging

Debt flagging was introduced in the electricity and gas markets on 17th October 2011. It was

designed to address concerns about ‘debt hopping’ which had been raised by energy suppliers,

consumer organisations, and social advocacy groups. ‘Debt hopping’ is considered to raise costs

for energy suppliers, which gets spread across all consumers. It also further compounds an

individual’s debt situation making it more difficult to manage in the long run. Debt flagging is

considered an effective tool to reduce the levels of debt hoping. To ensure it remains effective

the CRU periodically reviews the requirements around debt flagging.

A debt flag is raised if a customer who is in debt with their supplier (above a predetermined range

and duration) chooses to switch to another supplier. The losing supplier will raise the debt flag to

the new supplier, who can then accept or reject the customer who requested to switch. The rules

for this process are set out in CER/11/181, the Debt Flagging Industry Code. The process of debt

flagging was subsequently reviewed in 2013, resulting in revised thresholds and timings for

raising a debt flag. These are outlined in the CRU Debt Flagging Review which sets the current

debt flagging thresholds as those presented in Table 1.

Table 1. Current debt flagging thresholds as set out by CER/13/135, the Debt Flagging Review.

Market Sector Debt Flagging Threshold

Domestic ≥ € 225 for > 60 days from due

Electricity and (LV-NMD/DG5) ≥ € 600 for > 30 days from due

Medium Sized Business ≥ € 1,200 for > 30 days from due

A further review of debt flagging was carried out in 2016 (CER 16/014). It was decided in that

paper not to change the structure or values associated with debt flagging.

Due to changes in the market and development over time the CRU has decided that a review of

the debt flagging thresholds is required. The results of this review are outlined in this consultation

with views sought on the subsequent CRU proposals.

The Debt Flagging code also stipulates how and when a supplier must raise a flag and what

information the supplier must provide the customer during the process – particularly during sign

up and when a switch is being cancelled due to a debt flag. These will remain in force and are

not considered for review in this consultation.

https://www.cru.ie/wp-content/uploads/2011/07/cer11181.pdf

https://www.cru.ie/wp-content/uploads/2013/07/cer13135-debt-flagging-review-information-paper.pdf

https://www.cru.ie/wp-content/uploads/2016/07/CER16014-Debt-Management-Decision-Paper.pdf


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1.1.2 Revenue Protection Flag

The CRU is proposing in this consultation to introduce an additional flag - a Revenue Protection

(RP) Flag. This flag has been developed in response to concerns raised by energy suppliers

upon the high rate of energy theft from meter tampering. Meter tampering poses a safety risk and

adds additional costs to suppliers which gets spread across their customer base. The CRU

considered whether such additional measures were necessary and is of the view that the current

measure of a debt flag alone is not a significant enough deterrent for energy theft, whereas a RP

Flag will help; detect, investigate, prevent and deter interference at meters. The CRU is seeking

stakeholder views on whether a RP flag is necessary and whether it is an appropriate measure to

help address meter tampering.

The proposed RP Flag (if introduced) would operate in a similar manor to a Debt Flag. However,

instead of encompassing all debt, an RP Flag would only relate to debt built up as a result of

meter tampering. Debt in the context of a RP flag is any debt a customer owes their supplier

because of energy theft from meter tampering. In some cases, the customer at the address may

not have tampered with the meter but benefitted by consuming energy that they did not pay for.

In these situations, the customer would be in debt for the time that they benefitted from the

tampering. If a customer who has debt associated with metering tampering chooses to switch

supplier, the loosing supplier would be able to raise an RP flag to the receiving supplier. The

receiving supplier upon receipt of an RP flag would then be in the position to either: accept or

reject the new customer based upon their debt associated with meter tampering. If the receiving

supplier chooses not to accept the customer, then that switch would not proceed.

Note: The flag will in no way imply that the customer has deliberately tampered with the meter.

The purpose of the flag would be to ensure there are adequate mechanisms in the market to

assist suppliers in recouping the costs of stolen energy from those who have benefitted. The

person who benefited in the unmetered energy use, may not be the same as the person who

tampered with the meter.

1.1.3 Purpose of this Paper

This document is setting out the CRU’s review of the debt flagging procedure arrangements and

proposed updates. In addition, the CRU’s proposal on how to address meter tampering rates is

outlined.

The CRU welcomes opinions upon the proposals. Based upon responses received the CRU will

issue a Decision Paper upon the Debt Flagging process and whether it is appropriate to

introduce a RP flag.

Please note that the proposals outlined in this paper will not change the minimum requirements

set out in the Supplier Handbook around disconnection. These requirements will remain in place

with disconnection only being able to be carried out as a last resort.


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1.1.4 Related Documents

By way of background to this consultation paper, the following list of documents is of relevance:

• CER/11/106 – Customer Bad Debt in Electricity & Gas Markets

• CER/11/181 - Debt Flagging Industry Code

• CER/13/135 – Debt Flagging Review

• CER/16/014 - Debt Management: Debt Transfer & Debt Flagging

• CER//17/060 - Electricity and Gas Suppliers' Handbook April 2017

Information on the CRU’s role and relevant legislation can be found on the CRU’s website at

www.cru.ie.

1.1.5 Structure of Paper

• Section 1 Introduction – provides a background to Debt Flags explaining what they are,

rational for their introduction and parameters in their implementation alongside the

possible requirement for a measure to address meter tampering and the CRU’s proposed

methods of introducing an RP Flag

• Section 2 Findings and Proposals – outlines the CRUs proposals on Debt Flagging

and method for disincentivising meter tampering, This includes the proposed RP Flag

and proposed structure of this if it is decided to be introduced.

• Section 3 Timeline for Response – outlines the timelines for responses and next steps

the CRU will take in relation to this paper.

1.1.6 Responding to this Consultation

Responses to this consultation should be returned by email or post by close of business on 4th

February 2019 and marked with the reference CRU/18255.

The proposals the CRU is consulting upon are included in Annex 1. Within your response please

clearly mark the question number(s) your response(s) relates to.

Please forward submissions on this paper (preferably in electronic format) to:

Meabh Gallagher

Commission for Regulation of Utilities The Exchange, Belgard Square North, Tallaght, Dublin 24

E-mail: [email protected]

http://www.cer.ie/GetAttachment.aspx?id=e94d01c0-0fc4-45b9-a611-09fe8a0ea2ef

http://www.cer.ie/GetAttachment.aspx?id=be566750-801c-4c65-8e0d-f705e0ab74f9

https://www.cru.ie/wp-content/uploads/2013/07/cer13135-debt-flagging-review-information-paper.pdf


https://www.cru.ie/wp-content/uploads/2017/07/CER17060-Electricity-and-Gas-Suppliers-Handbook-April-2017.pdf

https://www.cru.ie/wp-content/uploads/2017/07/CER17060-Electricity-and-Gas-Suppliers-Handbook-April-2017.pdf

http://www.cru.ie/


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The CRU intends to publish all submissions received. Unless marked confidential, all

responses may be published on the CRU’s website. Respondents may request that their

response is kept confidential.

The CRU shall respect this request, subject to any obligations to disclose information.

Respondents who wish to have their responses remain confidential should clearly mark the

document to that effect and include the reasons for confidentiality.

Responses from identifiable individuals will be anonymised prior to publication on the CRU

website unless the respondent explicitly requests their personal details to be published.

Our privacy notice sets out how we protect the privacy rights of individuals and can be found

here.

https://www.cru.ie/privacy-statement/


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2. Findings and Proposals

2.1 Debt Flagging

2.1.1 Review of the Mechanism

The Debt Flagging mechanism can be deemed as a successful mechanism in reducing the

instance of ‘debt hopping’. Debt Hopping places additional costs upon suppliers, consequently

leading to an increase in energy costs for all customers. The cost of debt hoping is classified in

supplier costs under ‘bad debt’. Bad debt as a proportion of supply costs in a final bill has

reduced from 12.7% in 2015 to 9.6% of total costs in 2016.2

The graphs below show that the number of debt flags raised each quarter is a small proportion of

the number of overall switches. Since 2016 it has been below 1% of overall switches in electricity

and has never exceed 2% in gas. Of those raised only a proportion of them led to a cancelled

switch. This mechanism is therefore deemed not to present a barrier to switching. However, the

decreasing numbers of debt flags raised could be an indication that the thresholds are too high

and no longer fit for purpose in the present energy climate. It is not considered that reducing the

thresholds would detrimentally raise the rates of debt flags as a percentage of overall switches.

2 CRU17291 Energy Supply Costs Information Paper.

https://www.cru.ie/wp-content/uploads/2017/10/CRU17291-RFI-Information-paper.pdf


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0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

1.8%

Q4 2

011

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Gas Market Total Debt Flags as a Perenatge of Overall Switches

Total debt Flags as % of overallSwitches

-

100

200

300

400

500

600

Q4

201

1

Q1

201

2

Q2

201

2

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7

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201

7

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201

8

Q2

201

8

Gas Market Number of Change or Supplier Requests that were Accepted with a Debt Flag

Total Debt Flags

Debt Flagged CoS not cancelled


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0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

Q4 2

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Electricity Market Total Debt Flags as a Perenatge of Overall Switches

Total debt Flags as % ofoverall Switches

-

500

1,000

1,500

2,000

2,500

Q4 2

011

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Electricty Market Number of Change or Supplier Requests that were Accepted with a Debt Flag

Total Debt Flags

Debt Flagged CoS not cancelled


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2.1.2 Threshold Value

The threshold for raising a debt flag is based upon the average electricity bill. The current values

are based upon a value derived in 2013. Since then tariff rates have changed and in 2017 upon a

review of the market3, the average annual consumption figure was reduced:

Electricity MWH Change Gas MWH Change

Old 5,300 ↓ 23%

Old 13,800 ↓ 25%

Revised 4,200 Revised 11,000

A result of the reduced average annual consumption is that the average annual bill for

consumers has lowered. It is therefore considered that the debt flagging threshold should

correspondingly be reduced in line with these changes.

The average annual bill4 across all supplier’s5 standard and best available discount plans are

outlined below, including what this would equate to bi-monthly (if equally spread over the year).

Electricity

Standard Plan Discount Plan

Annual Bill Bi-monthly

Bill Annual Bill

Bi-monthly Bill

Electric Ireland €1,063 €177 €1,019 €170

Energia €1,176 €196 €897 €150

BGE €1,087 €181 €914 €152

SSE Airtricity €1,113 €186 €920 €153

Panda power €1,120 €187 €948 €158

Just Energy €1,093 €182 €947 €158

BeEnergy €965 €161 €965 €161

Average € 1,088 € 181 € 944 € 157

Prices as per August 2018

3 CER/17042 Review of Typical Domestic Consumption Values for Electricity and Gas Customers 4 Based upon the average annual consumption values, including all taxes, levies and VAT. Excluding any cashback offers. 5 Note PAYG offerings have been excluded from this analysis as generally it is harder for these customers to build up large sums of debt due to the payment model of PAYG. Electricity PAYG tariff plans impose an additional (service) charge for the installation, maintenance and operation of an electricity PAYG meter by the supplier. Consequently, electricity PAYG tariff plans generally have a higher average annual bill, which could skew the results.

https://www.cru.ie/wp-content/uploads/2017/07/CER17042-Review-of-Typical-Consumption-Figures-Decision-Paper-1.pdf


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Gas

Standard Plan Discount Plan

Annual Bill Bi-monthly

Bill Annual Bill

Bi-monthly Bill

Electric Ireland €790 €132 €755 €126

Energia €771 €129 €771 €128

BGE €818 €136 €724 €121

SSE Airtricity €781 €130 €760 €127

Flogas €769 €128 €702 €117

Just Energy €750 €125 €700 €117

Panda power €764 €127 €744 €124

Average € 778 € 130 € 737 € 123

Prices as per August 2018

It can be seen from the tables above that the average electricity bi-monthly bill across all

suppliers ranged from €150-€196, with an overall average of €169 (across standard and best

available discount plans offered by all suppliers).

The average bi-monthly bill across all suppliers for gas is slightly lower ranging from €117-€136,

with an overall average of €127 (across standard and best available discount plans offered by all

suppliers). The CRU considered introducing separate thresholds for electricity and gas in light of

this. However, upon further consideration, deems a single threshold value for both electricity and

gas is the optimal approach. This is to ease consumer understanding, and account for the

seasonality of gas usage. The calculation of the current debt flagging threshold hold was based

upon the value of the average electricity bill. The CRU sees no reason to change this.

A 25% reduction in the threshold for the domestic sector (in line with the percentage reduction in

average annual consumption) would see the threshold aligning with the overall electricity bi-

monthly bill at €169. However, this does not consider the change in consumption across the year

(for example higher consumption in winter), the size of a household or the type of house. Any

reduction should take into account larger households and not significantly impact on them. For

this reason and the potential large increase in the number of debt flags, the CRU is proposing

that the threshold be reduced by 10% to €200. This value is above the highest average annual

bi-monthly bill on the market of €196, so should not significantly impact upon any particular group

of customer.

For business customers, the CRU is proposing to reduce the threshold by a similar percentage

as outlined for domestic customers. To generate a round figure the non-domestic customer

thresholds proposed are approximately a 15% reduction from current thresholds. The CRU is

proposing a threshold of €500 for small businesses and €1,000 for medium businesses.

1. Do you have any comments on the CRU’s proposed changes to the monetary

thresholds for raising a Debt Flag?


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2.1.3 Timing

The CRU is proposing no change to the current timings for being able to raise a debt flag (debt

outstanding for more than 60 days (domestic) and 30 days (business) after payment becomes

due). No change has occurred to the standard credit management system operations that

informed the timeline decision in the 2013 Debt Flagging Review Paper. The same rational

remains that the flagging timings should be aligned with a 30-day period or a multiple to be in line

with the operation timings of the Standard Credit Management Systems.

Note: the timing threshold is taken to mean the number of days outstanding after the date stated

on the bill that payment is due by, not the number of days after the date on which the bill was

sent. The supplier will first be able to debt flag a non-paying domestic customer 60 days after

that customer’s bill becomes due for payment. Bills are generally issued every two months with

two weeks given to the customer to pay. Therefore, over 4 months will have passed before a

customer can be debt flagged upon energy usage they have not paid for (if the customer is billed

every month, then the debt flag could be raised a month earlier).

2.1.4 Unmetered connections

Unmetered connection relates to DUoS groups DG3 and DG4. DUoS Group DG4 relates to

unmetered public lighting (associated with local authorities) and DUoS Group DG3 relates to

other unmetered loads, such as traffic lights, telephone kiosks and bus shelters (associated with

businesses). Unmetered supply may have loads up to 2kVa, which falls below the minimum

loads associated with the higher DUoS business groups. Such an anomaly is not present on the

gas side, where all customers bar Large Energy Users are covered by debt flagging (note there

are no unmetered sites on the gas side).

Debt flagging will apply to all electricity and gas customers from domestic, up to, but not including

Large Energy Users. The debt flagging of unmetered electricity supply will continue. Thresholds

for debt flagging are set to reflect the relative size of the bills. The threshold for unmetered

electricity supply (Groups: DG3 and DG4) is set to match that of the DUoS group whose average

consumption it is closest to.

Currently, the debt flagging threshold for unmetered supply is set to that of DG5. Since 2017 the

measurement of DG3 and DG4 was changed from grouped connections to equate to the number

of actual connections (TMPRNs). Consequently, the average consumption in these DUoS groups

has reduced significantly. Nonetheless, as outlined in the table below, the average consumption

of unmetered connections (DG3 and DG4) still lies closest to DG5

2. Do you have any comments on the CRU’s proposal to maintain the current timings

for raising a Debt Flag?


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DUoS Group Average Annual

Consumption (kWh)

DG1 3,364

DG2 3,467

DG3 & DG4 15,478

DG5 19,383

Based on 2017 data

As such, it is proposed that the debt flagging threshold for unmetered supply remain to be set to

that of DG5.

2.1.5 Debt Blocking

As per the decision in CER/16/014 Debt Transfer and Debt Flagging the process of debt blocking

is not being considered by the CRU.

The CRU considered and rejected debt blocking; a process in which a customer seeking to

change supplier would be prevented if they had a debt above a specified amount. Debt blocking

would go against the principals of an open and fair market in which customers are able to switch

between suppliers. Debt blocking would give suppliers inappropriate powers to prevent or delay a

customer switching away from them.

2.1.6 Debt Flagging Proposals

Market Sector Current Threshold Proposed Threshold

Domestic ≥ € 225 for

> 60 days from due ≥ € 200 or

> 60 days from due


≥ € 600 for > 30 days from due

≥ € 500 or > 30 days from due


≥ € 1,200 for > 30 days from due

≥ € 1,000 or > 30 days from due

4. Do you have any other general comments on the CRU’s proposed structure or

values associated with debt flagging?

3. Do you have any comments on the CRU’s proposal to set the debt flagging threshold

for unmetered supply to that of DG5?



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2.2 Potential Revenue Protection Flag

If the CRU decides to introduce an RP flag to address the levels of meter tampering, the

structure and applicability of this flag will have to be decided upon. As such the CRU has outlined

in the following section, proposals around such a flag. The inclusion of these proposals does not

indicate that the CRU has decided to implement an RP flag, this will only be decided once all

responses to this paper have been received and reviewed. The CRU notes the following

proposals will only be required if it is decided to introduce an RP flag.

2.1.7 Applicability

The rate of meter tampering is relatively consistent in both the electricity and gas markets.

The CRU has analysed the number of confirmed meter tampers over the past three years. These

have been scaled to total meter population in each market to determine the percentage rate of

meter tampering each year. This is displayed in the table below.

Detected Cases 2015 2016 2017

Electricity 1,410 1,196 950

% total customer base 0.06% 0.05% 0.04%

Gas 618 414 486

% total customer base 0.09% 0.06% 0.07%

Overall the number of confirmed meter tampers per year is relatively low when considered as a

percentage of total customer base. However, due to the safety concerns of meter tampering and

high costs (as outlined previously) the CRU considers that an appropriate deterrent needs to be

in place to discourage meter tampering. The CRU is proposing an RP Flag would be introduced

into both the electricity and gas markets due to the similar rates of confirmed meter tampering as

a percentage of the total customer base. Within these markets an RP Flag would be able to be

raised against both domestic and non-domestic customers.


The CRU is proposing to align the minimum threshold value to raise an RP Flag with that of a

debt flag.

Market Sector Proposed Threshold

Domestic ≥ € 200


≥ € 500


≥ € 1,000

5. Do you have any comments on the CRU’s proposal to introduce an RP Flag to both

the electricity and gas market?


12

The CRU considers these values would be sufficient to enable the RP flag to act as a deterrent

to meter tampering. If the values were lower (or there was no threshold) the flag could become

an administrative burden to suppliers. Additionally, the CRU is of the view that the values should

align to those of the debt flag to enable a smooth transition between being able to issue an RP

flag and then subsequently a debt flag (if the customer is still in debt after a year has passed

from the customer receiving an RP read). This would both facilitate ease of customer

understanding and limit system updates for suppliers. Note: in contrast to the debt flagging

thresholds there would be no minimum time limit before a supplier could raise an RP flag. It is

only the minimum monetary values that are proposed to be aligning.

2.1.9 Timings

Minimum Timeline for Issue

Where the network operator identifies meter tampering, they issue the relevant market message

to the supplier through the central market systems. In order to raise an RP flag, a supplier must

have received the relevant market message from the network operator in relation to the customer

having a tampered meter. The proposed RP Flag would only be raised once the Network

Operator has issued the read to the supplier and a bill has been issued to the customer with the

amount outstanding. If the Network Operator is satisfied that the current customer at the meter

point did not derive any benefit from the tampering, an RP Read would not issue and therefore

an RP Flag could not be raised by the Supplier.

The CRU is proposing that no minimum time period must pass before an RP Flag could be

raised. Once a supplier is in receipt of an RP Read market message and a change of supplier

commences, the supplier could raise an RP Flag. Debt associated with tampering has been in

existence for a significant period prior to being transferred to the supplier. This is because the

debt associated with tampering builds from the time the tampering takes place. It can be a

considerable amount of time before the tampering is discovered and the debt applied to the

customer’s account. This means that the debt has been owed much longer than the minimum

time period set out for a debt flag. For this reason, the CRU proposes no further time would have

to pass before an RP flag could be raised (if introduced).

For move out/ move in cases, if the current customer at the address did not tamper with the

meter but benefitted by consuming energy that they did not pay for, they will receive an RP Read

and therefore an RP Flag could be raised. It’s important to note that the customer would only

receive an RP Read for the time that they benefitted from the tampering. In other words, if the

tampering took place before they moved in, they would only be liable for the cost of RP-related

consumption while they occupied the premises. Customers can provide tenancy agreements as

proof of their occupancy timeframes.

6. Do you have any comments on the CRU’s proposal to align the minimum threshold

value to raise an RP flag with that of a debt flag?

7. Do you have any comments on the CRU’s proposal to have no minimum time

threshold for a supplier to be able to raise an RP Flag on a customer?


13

Maximum Timeline for Issue

An RP Flag would not be enduring once the associated meter tampering debt has been paid.

Suppliers would only be able to raise an RP Flag on a customer if they had outstanding debt

associated with meter tampering. Once the customer has paid off their debt associated with

meter tampering, an RP flag could no longer be raised. Customers with debt associated with

meter tampering would therefore be able to prevent an RP Flag being raised against them if they

paid their supplier the amount they owe associated with meter tampering.

To accommodate this, if a customer has debt associated with meter tampering, their supplier

would first use any payment towards debt made by the customer to pay off their debt from meter

tampering. Only once this debt is paid off by the customer would the supplier assign debt

repayments to any general debt the customer may have.

A backstop time limit upon how long a supplier could raise an RP flag against a customer is

proposed. The CRU is proposing that an RP flag (if introduced) could only be raised against a

customer for up to one year after the supplier has received an RP read (from the network

company). After this stage, the supplier would not be able to issue an RP Flag, but they would be

able to issue a Debt Flag if the customer has debt above in the thresholds that will be decided

upon in the subsequent Decision Paper. Aligning with this backstop, suppliers would no longer

have to distinguish debt relating to meter tampering from all other debt for debt repayment after

the backstop year.

The CRU considered proposing no time limit upon how long a supplier could raise the proposed

RP Flag; essentially enabling suppliers to raise an RP Flag on a customer with metering

tampering debt indefinitely or until they pay off all their associated debt. However, the CRU

considered that this could not work in practice. Debt relating to metering tampering is a single set

amount, whereas other forms of debt can continuously build up each billing period. Therefore,

even if a customer is paying off a certain amount of their debt each month, they may never come

out of debt. The result is that a customer could have an RP flag raised against them, due to their

levels of debt, many years after they have paid back the total debt they owe because of meter

tampering. It is deemed unfair that a customer could be issued with an RP flag after they have

effectively paid off their meter tampering associated debt. To overcome this, the type of debt

would have to be separated out by suppliers between debt associated with meter tampering and

all other debt. The CRU considered this process too burdensome; requiring suppliers to update

their systems to support the separate reporting, adds confusion to customers on which debt they

would be paying off, and would be hard to monitor to ensure debt repayment is being allocated to

the right categorisation of debt. For these reasons the CRU is proposing to set a time limit (of

one year) for the maximum timeline in which suppliers can issue an RP Flag on a customer (if

introduced).

It should be noted that after a year has passed a customer with debt associated with meter

tampering would be valid for a debt flag to be raise against them (provided they have debt above

the thresholds outlined in this paper).

8. Do you have any comments on the CRU’s proposal to have a time limit of one year

for a supplier to be able to raise an RP Flag on a customer?


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2.1.10 Debt Blocking

The CRU considered introducing a debt blocking process to customers with meter tampering

debt. However, as explained earlier, customers with meter tampering debt may not have

tampered with the meter themselves. Meter tampering debt does not signify that the induvial has

carried out the criminal offense of meter tampering. For this reason, the CRU considers that the

same rational in relation to debt blocking should apply to customers with debt associated with

meter tampering as those customers with debt from non-payment of accounts covered under the

Debt Flag. Consequently, the CRU has considered and rejected the debt blocking process for

customers with meter tampering debt.

2.1.11 Alternatives

The CRU has considered whether an RP Flag is the best approach to tackle the issue of meter

tampering. The CRU identified that a debt flag provides a similar mechanism to that of the

proposed RP Flag. A debt flag can be raised when a customer has debt with their current

supplier over a set amount and timeframe. This covers all debt, so would include debt related to

meter tampering. Therefore, there is already a mechanism addressing meter tampering related

debt in the market (the debt flag).

However, in reviewing the debt flag the CRU considered that there are a number of aspects

specific to meter tampering debt that prevent the debt flag from being a fully effective deterrent to

meter tampering. Suppliers indicated that they may be more willing to accept a customer in debt

due to non-payment of accounts rather than a customer with meter tampering debt, especially if

they have systems in place to help customers manage their payments. As such some of the

switches with debt flags proceed, whereas if the supplier knew the debt was in relation to meter

tampering they may not have proceeded with the switch.

Additionally, the full value of meter tampering debt occurs instantaneously, rather than being built

up over time (as is the case with debt from non-payment of accounts). It was therefore

considered that the lag time before being able to raise a flag would not be suitable for both forms

of debt. Hence the proposals for two separate flags.

The CRU has been in communication with the network companies upon the process of

introducing a new flag into each market. This is a relatively simple process with minimal

associated costs, due to the fact that the processes and systems broadly align with the debt

flagging process, that is already in place. It should also be noted that the measure should reduce

some costs for customers by deterring incidents of meter tampering in the future.

In addition, there has been particular effort in addressing the levels of meter tampering

(especially on the gas side) and the CRU has proposed the RP Flag as a measure to support

this. It is considered a sperate flag to the debt flag would provide a new signal to suppliers that

may reduce the number of switches proceeding, limiting the ability to debt hop and act as a

deterrent to potential meter tampers (as individuals would know they will have to pay the money

back). It is considered this could reduce the levels of meter tampering, which in turn would

reduce costs for all customers and bring about benefits in relation to safety.

Nonetheless, the CRU recognises there could be alternative measures that could be introduced

to reduce the levels of meter tampering. There may also be rational for maintaining just one flag

(the Debt Flag) to act as a deterrent for both building up debt and meter tampering. Therefore,


15

the CRU welcomes any responses upon this before makings its decision to introduce an RP flag

or not.

2.1.12 RP Flag Proposals

Parameter Outline

2.1.7 Applicability - Electricity and gas market - Domestic and Non-domestic


- Aligned with that of a Debt Flag Domestic ≥ € 200 Electricity and (LV-NMD/DG5) ≥ € 500 Medium Sized Business ≥ € 1,000

2.1.9 Timings

- No minimum time threshold (can raise an RP Flag as soon as they receive an RP read)

- Once the debt associated with meter tampering is paid an RP Flag cannot be raised

- An RP flag can only be raised against a customer for up to a year after meter tampering is confirmed

Alternative - Do not introduce an additional flag (RP Flag) and rely upon

the Debt Flag as a suitable deterrent to meter tampering.

9. Do you have any comments upon the suitability of maintaining the Debt Flag as a

suitable deterrent to meter tampering?

10. Do you have any other proposals upon measures that could be introduced to

reduce the levels of meter tampering?


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3. Timeline for Response Responses to this consultation should be returned by email or post by close of business on 4th

February 2019 and marked with the reference CRU/18255. Within your response please clearly

mark the question number(s) your response(s) relates to.

The CRU will review all responses received. Based upon these, the CRU will publish a decision

paper at the start of 2019.

Based upon changes that occur in the market, the CRU will carry out further reviews on the debt

flagging process every three years (or sooner where appropriate) to ensure it is still fit for

purpose. In the interim the CRU will monitor the level of Debt Flags raised and change of supplier

requests cancelled as a result. This will be through the regular Retail Market Monitoring that is

published by the CRU on a Quarterly and Annual Basis. If the CRU decides to introduce an RP

Flag, this will be reviewed at the same stage (after three years) to ascertain its effectiveness over

that period to decide if it should be retained and / or amended.

Note: To implement changes to the debt flagging process and introduce an RP flag may require

some system changes to the retail market for both electricity and gas. Based upon the decisions

on the Debt Flagging processes and introduction (and if decided to proceed with) process around

an RP Flag, the CRU will work with the relevant network operators (ESBN for electricity and GNI

for gas) to develop a timeline for implementing any system changes that may be required. This

will be outlined in the decision document following this consultation.


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Annex 1

Proposal Question

1. Do you have any comments on the CRU’s proposed changes to the monetary thresholds for raising a Debt Flag?

2. Do you have any comments on the CRU’s proposalto maintain the current timings for raising a Debt Flag?

3. Do you have any comments on the CRU’s proposal to set the debt flagging threshold for unmetered supply to that of DG5?

4. Do you have any other general comments on the CRU’s proposed structure or values associated with debt flagging?

5. Do you have any comments on the CRU’s proposal to introduce an RP Flag to both the electricity and gas market?

6. Do you have any comments on the CRU’s proposal to align the minim threshold value to raise an RP flag with that of a debt flag?

7. Do you have any comments on the CRU’s proposal to have no minimum time threshold for a supplier to be able to raise an RP Flag on a customer?

8. Do you have any comments on the CRU’s proposal to have a time limit of one year for a supplier to be able to raise an RP Flag on a customer?

9. Do you have any comments upon the suitability of maintaining the Debt Flag as a suitable deterrent to meter tampering?

10. Do you have any other proposals upon measures that could be introduced to reduce the levels of meter tampering?