ENERGY customers are struggling under a £500million debt mountain – as a new wave of inflation-shattering price rises is set to trigger fresh carnage.
A report by industry regulator Ofgem reveals the amount owed to suppliers soared last year, and trebled in the past decade.
Yet that was during a rare period when prices actually fell. Since then, households have been hit with a round of winter price rises.
And there appears to be no let-up in the misery after Scottish Power became the first supplier to announce a second lot of increases, even more punishing than the first.
Rival suppliers British Gas, EDF Energy, npower, E.ON and Scottish & Southern Energy are expected to follow suit over the coming weeks and months.
However, Ofgem’s study uncovered a worrying number of households are already on the edge of a financial precipice – with the poorest being squeezed the hardest. At the end of 2010, 900,000 electricity customers and 700,000 gas customers were repaying debts to their supplier.
The number of electricity customers in the red was down by 100,000 on 2009, but even these figures mask the true scale of the crisis as they only include people identified as in trouble, with countless more customers up to their neck in debt and suffering in silence.
Though prices dropped early last year, the average owed by electricity customers jumped from £280 to £316 and for gas from £288 to £310.
Worryingly, the number of people even deeper in debt has also soared, with around one in seven paying back more than £600. The report concluded: “It is likely that customers are delaying payment of their energy bills due to other priorities,” and suggests suppliers should take a more lenient approach as families struggle with increases in living costs.
There is some evidence of that, with a fall in the amount suppliers ask customers to repay each week.
For most, the figure is just over £6-a- week, but for those on a pre-payment meter (PPM) it’s well over £7-a-week, despite them being among the country’s poorest households. The number of households with an electricity PPM leapt 200,000 to a record four million last year, while the number of gas PPMs rose 100,000 to 2.7million.
Having a PPM used to be a rip-off but action by Ofgem forced suppliers to cut prices so that, on average, they are £20-a-year cheaper than prices for someone who settles their bill every quarter by cash or cheque, although more than if you pay by monthly direct debit. If you’ve fallen behind with your bill – or you’re worried that you might do – it is vital you alert your supplier. There are rules that state firms MUST treat you sympathetically and offer alternative ways of paying, including switching to a PPM.
If you’re in debt, they MUST look at your individual circumstances and set repayments at a level you can afford.
For those who still can’t pay (or won’t) there is something called Fuel Direct, which is considered by suppliers as a last resort.
If you’re on state benefits, the scheme involves repayments being deducted before you receive your money. There are strict guidelines on who suppliers can cut off and, thankfully, the number of disconnections has fallen sharply in recent years, dropping to just over 2,800 customers in 2010.
DISCONNECTED
Rules ban suppliers from “knowingly” disconnecting pensioners during the coldest months of the year – October to the end of March.
They must also try to avoid doing so where someone in the house is disabled or chronically ill. EDF Energy has the worst track record for electricity disconnections, although the firm argues it is due to problems installing PPMs in flats in London.
Scottish Power disconnects the most gas customers. But, the company says it has a disproportionately high number of flats with communal areas. Soaring energy bills have left more than five million households in “fuel poverty”, which is defined as those who spend more than 10% of their income on gas and electricity.
But there is help at hand through the Warm Homes Discount, a new £1.1billion, four-year deal between the Government and industry.
Under the scheme, suppliers give vulnerable pensioners and others a £120 rebate, rising to £140 by 2014/15.15.06.2011 - Mirror
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