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Energy News Story


Gas & Electric debt on the rise

Published: 12/06/2010 by Comments

Depending on how one looks at it, the energy suppliers have either improved their financial dealings with their customers, or continue to fail their customer base in these lean times. But regardless of perspective, there is still a lot of room for improvement in the way the customers debts are being dealt with. Such are the conclusions of a new study completed by Ofgem, the energy regulator and the campaign group Consumer Focus.

The study - which reviewed how gas and electricity suppliers help their customers manage their debt, and how they assess an individual’s ability to meet their payment obligations - found that although the majority of the customers were reasonably satisfied with how the companies handled their situation, it found some worrying signs that companies might not be proactive enough in helping customers that may struggle to tackle their mounting debts. Research also found a considerable degree of variance in the customer to customer dealings of the companies.

The research was based on information received from all of the key suppliers, surveys of customers, and meetings with Citizens Advice.

A major area of concern identified by the research was the frequent failure of suppliers to correctly asses the customers’ financial ability when arranging the debt repayment deals.

Audrey Gallacher, head of energy policy at Consumer Focus, said that many customers contact both Consumer Focus and Consumer Direct on a daily basis, expressing their worries about making their debt payments. Given the current economic climate, she emphasized the importance of the suppliers making an effort to understand the personal circumstances of their customers, and “agree realistic and affordable debt repayment plans”

Sarah Harrison, senior partner for sustainable development at Ofgem, revealed that while the number of energy customers that find themselves in debt has remained relatively steady over the past 18 month period, the average amount owed by individual customers has increased.

In their own proactive attempt to help the customer in need, Ofgem and national charity Citizens Advice met with the energy suppliers to establish a framework of principles, which would help the companies to assess a customer’s ability to pay. The framework proposal has received widespread support from the industry, and includes ideas such as making proactive contact with customers and making sure that they fully appreciate their repayment agreements.

Teresa Perchard, Citizens Advice’s director of policy, was enthusiastic about the Ofgem and energy suppliers collaborations. According to Perchard, with the number of fuel debt related energy problems dealt with by bureau up by 33% this year, it is clear that there is a problem, and it is imperative that the energy suppliers assist those that find themselves in the dire straits of debt.

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