The Fuel Direct scheme allows benefit claimants to pay for energy debts through small deductions from their welfare payments, meaning the costs are spread over a longer period of time.
Ordinarily, suppliers can request increased payments made via Fuel Direct. On April 1, however, the DWP changed the rules, meaning only claimants themselves could opt to make or increase payments through the scheme. This was to prevent deductions from benefits being too high.
Coffey’s letter says that the response from energy companies to these changes has been of “real concern”, with several suggesting they would stop offering the Fuel Direct scheme as a result.
Two companies, according to the letter, have lobbied Energy UK to try and relax “supply licence conditions”, rules which state energy companies must help customers who have difficulty paying bills.
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This could involve spreading repayments over a longer period of time, for example.
The letter also states some energy companies are forcing benefit claimants to move onto prepayment meters for energy, which involve higher costs.
Coffey called the stance taken by some suppliers “unacceptable”, and called on Ofgem for an immediate response on the issue.
Simon Francis, from the End Fuel Poverty Coalition, said: “That energy suppliers are trying to wriggle out of supplying energy to those most in need on the grounds of commercial viability, says all you need to know about the broken nature of Britain’s energy system.
“It’s becoming increasingly clear that we need a fundamental review of how the market operates and fresh ideas such as social tariffs or an energy for all allowance need to be considered.”
A representative from Energy UK said: “Suppliers are fully committed to meeting their licence conditions and to continuing their support for customers who are struggling to pay their bills.
“The issue was caused by the DWP’s decision to make very significant changes to the Fuel Direct scheme on the eve of the new price cap coming into force, without any consultation with the industry – those who would, after all, have to rapidly put the changes into operation.
“The changes to the Fuel Direct Scheme amply illustrate the challenges facing customers on low incomes in paying their bills, which is why we continue to urge the Government to increase the current support package.”
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