Customer debts to energy suppliers rise to more than £900m

http://www.theguardian.com/money/2014/dec/18/customer-debts-energy-suppliers-rise-ofgem

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A simmering row about high domestic energy prices was reignited on Thursday as figures from the industry regulator, Ofgem, showed total customer debt to suppliers had risen to more than £900m.

The Labour party said this and a 23% increase in electricity disconnections “lay bare the full scale of the cost-of-living crisis and David Cameron’s failure to tackle rip-off energy bills”.

The latest annual report by Ofgem on suppliers’ social obligations showed a total of 1.5 million customers were in debt on their electricity payments, and 1.4 million on gas payments – around one in every 17 customers, and a rise on 2012.

Each indebted customer owes an average of more than £300, while more than 550 people had their electricity switched off and 84 had their gas disconnected in 2013. The industry says this penalty is used only as a last resort.

E.ON, the German-owned supplier, had a particularly high number of electricity disconnections – 225 last year, compared with 150 in 2012 and 25 in the 12 months before that. Rival npower switched off the lights on 111 customers in 2013, compared with 51 the year before.

Tom Greatrex, the shadow energy minister, said the report was a dreadful indictment of both the industry and the government. He said: “On David Cameron’s watch energy bills in Britain have risen twice as fast as inflation, four times faster than wages, and faster than almost any other country in the developed world. Many households simply cannot cope – and now the big six [suppliers] are leaving them in the dark. We cannot afford another five years of this.”

Caroline Lucas, the Green party MP, said: “Energy companies should not have the right to disconnect people who can’t afford to pay their bills or top up their meters. These figures are a disgrace, but they also show that tweaking the rules and regulations won’t stop the big six energy companies making huge profits whilst treating often vulnerable customers in appalling ways.”

Ofgem argued that the overall number of disconnections was low in terms of the total number of UK customers, but promised to examine how suppliers were communicating with customers who struggled to pay.

It expressed concern that some pre-payment meter (PPM) users may be self-disconnecting. “Ofgem is working with Citizens Advice to better understand the causes of self-disconnection for PPM users and how customers in financial difficulties can be best supported.”

Energy UK, the lobby group for suppliers, has always defended the use of forced switchoffs as a sanction that insulates those customers who do pay their bills from shouldering a heavier financial burden.

“Disconnection is only ever used as a last resort. It follows a lengthy attempt by the supplier to recover a debt. It is rarely used and only in cases where customers won’t pay their bills,” it says on its website.

E.ON was unavailable for comment.

A spokesman for npower said: “Disconnecting a customer’s supply is an absolute last resort for us and only ever carried out after all other attempts to recover any debt has been exhausted. We have robust policies and procedures in place to make sure any vulnerable customers are not disconnected.”

A spokesperson for the Department of Energy and Climate Change said: “We are working hard to help keep households across Britain warm this winter. We’ve already spent £2.15bn to help pensioners pay for their bills through winter fuel payments, along with £310m on the warm home discount for those at risk of fuel poverty.

“We’re also working to cut people’s bills – permanently – by making one million homes warmer and cheaper to heat by March next year, on top of an investment of over half a billion pounds in energy efficiency.”