Social Justice

Energy companies tried to scrap requirement to help customers struggling to pay bills

"At least two" energy suppliers have attempted to "relax" requirements on helping their customers, a letter from the DWP reveals.

universal credit and benefits

Work and pensions secretary Thérèse Coffey. Image: Foreign, Commonwealth and Development Office/Flickr

“At least two” UK energy suppliers have attempted to “relax” a requirement to support customers struggling to pay their bills.

A letter from Department of Work and Pensions (DWP) minister Thérèse Coffey to energy regulator Ofgem states the energy companies have asked trade association Energy UK whether it would support lobbying Ofgem to relax the requirement. 

The DWP declined to name the two energy companies concerned when asked by The Big Issue. 

The revelations come as millions of households are facing unprecedented costs for energy, with the price cap expected to rise even further in October, to £2,800 a year.

This week, Chancellor Rishi Sunak announced that the government would be exploring energy market reforms to “ensure the price paid for electricity is more reflective of the costs of production” alongside one-off payments to help households with paying their bills.

Coffey’s letter, published on May 20, concerns a change made by the DWP to the way benefit claimants can pay energy debts through “Fuel Direct”.

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.

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.”

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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.”

The Big Issue is committed to helping readers make it through the cost of living crisis. Here’s where to turn for some real solutions:

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