Energy Firms Told to Do More on Unpaid Bills Before £2.5bn Write-Off
An energy minister has asked Great Britain's largest suppliers to do more for households that have fallen behind on their bills. The call comes before the government commits almost £2.5bn to write off record levels of energy debt.
A roundtable before the write-off
Energy bosses were called to an online roundtable on Thursday. Senior leaders from the six largest suppliers attended, along with Energy UK, the fuel poverty charity National Energy Action and five consumer advice groups, Citizens Advice among them.
One attendee said the plans carry a lot of ambition, and that the minister wanted suppliers and consumer groups in one room so the scheme is actually delivered.
Polly Billington, the minister for energy consumers, is understood to have told bosses from Octopus Energy, British Gas and EDF Energy that suppliers still have a crucial part to play. Her message was that government money alone will not solve a long-standing problem.
The plan would pay down the energy debts of about 2.4m of the hardest-hit households. It sits inside a "circuit-breaker" strategy the chancellor set out in last month's budget statement. Household energy debt could reach £7bn by the end of the year.
What suppliers are expected to do
Suppliers should proactively spot customers who may be under financial strain. They are then expected to offer help, such as payment plans or a pointer to debt advice.
The government also wants to work with the industry on finding households that need extra support, and on updating payment systems so bills are easier to pay. Ministers have also backed smart meters, including pre-pay ones, so that households can keep an eye on what they spend and avoid falling behind.
Why other bill payers care
Unpaid bills are not absorbed by suppliers alone. Across the market, the average household pays about £50 a year on its energy bill to cover them. That figure would probably grow without action.
Billington said: "I know that energy debt weighs heavily on millions of families across the country." She added that the costs are passed on to other bill payers.
She also said the measures target vulnerable households still carrying debt from the energy crisis a few years back. Making energy affordable for everyone, she said, is the government's top priority.
Ministers estimate that the one-off relief scheme, paired with new measures to stop debt building up again, would trim a typical household's bills by roughly £130 across the next decade.
Debt that starts with a house move
About 40% of unpaid bills are understood to build up while people move home. The government plans to respond with reforms, including a new duty on landlords. Landlords would have to pass the meter reading and the date of a move to the supplier whenever tenants arrive or leave.
Charity and industry reaction
Gillian Cooper, director of energy at Citizens Advice, attended the meeting. Typical annual energy bills are predicted to rise again in January, she noted. In her view it is essential that the scheme covers current debt and also protects households from sliding into arrears in the first place.
Rachel Fletcher, a director at Octopus Energy, the country's biggest supplier, said she welcomed the focus on preventing debt. She added: "Nothing in this package should weaken suppliers' incentive to keep innovating and investing to help customers avoid and manage debt."
Source: the Guardian