Barriers to switching suppliers cause fuel poverty

Published on Friday 6 November 2009 19:19

SCOTS struggling to pay their fuel bills face a long, cold winter as high energy bills deter many from turning their heating on, alarming new figures show.

Energy Action Scotland (EAS) claimed that, with almost a third of Scottish households scrambling to meet rising energy costs, more help for low-income households is needed if the government is to meet its target of ending fuel poverty by 2016.

And thousands of Scots are planning to wear extra layers this winter or delay turning their heating on in a bid to save money, according to research from Moneysupermarket.com, which said 40 per cent of annual fuel consumption was accounted for between November and January. Of those delaying putting their heating on, 27 per cent of Scots admit it is because they cannot afford to pay their fuel bills, compared with 18 per cent elsewhere in the UK.

The average annual household gas bill has risen 120 per cent from 365 to 804 since September 2000, while the average electricity bill soared by 48 per cent from 299 to 443 over the same period, according to energy watchdog Ofgem.

As a result, the number of Scottish households in fuel poverty – those who spend more than 10 per cent of their household income on heating their homes – has rocketed in recent years, with over 800,000 households struggling to pay their bills, EAS revealed this week.

Many of the worst affected households are on prepayment meters, usually installed by energy suppliers to recover debt but costing energy customers more than other forms of payment. Ofgem figures show that over a thousand are being installed in Britain every day.

Prepayment tariffs have fallen in recent months, with some suppliers, including Scottish Power, E.ON and Npower, bringing their rates in line with quarterly billed prices. But the fuel poverty action group at the North Edinburgh Trust, a community action group, called for pre-payment prices to be reduced to the same as the level of the cheapest energy rates, typically reserved for those happy to manage their accounts online and pay by direct debit.

"There is a huge difference, but many people on low incomes do not have access to bank accounts so they cannot take advantage," said a spokeswoman for the Trust.

Because many people on low incomes cannot save for future bills, they often retain the meters even after their debts are paid so they can budget more effectively, she added. "This is a major problem because pre-payment meters make things worse for people already struggling to cope. Energy isn't a luxury."

Trisha McAuley, interim director at Consumer Focus Scotland, called on energy suppliers to remove unfair charges for prepay customers and make it easier for those who want to move off pre-payment meters to do so.

"Around one third of those with pre-payment meters are already considered to be vulnerable and the extra cost only increases the likelihood of them being in fuel poverty," said McAuley. "Vulnerable consumers in Scotland also need extra help and advice to obtain a fairer deal on their fuel bills."

One of the biggest steps households can take to cut costs is to switch supplier or, where possible, move to a cheaper rate, such as that offered by online tariffs. But disadvantaged consumers – such as older people, those with learning difficulties or who are partially sighted, those living in remote rural areas or on low incomes – are the least likely to switch, according to a report out next week from Consumer Focus Scotland.

It says disadvantaged consumers wishing to switch face "an unacceptable range of barriers", including a lack of independent and accessible information, difficulties in comparing suppliers and tariffs, pressure from existing suppliers to reconsider and high charges from the existing supplier in order to terminate their contract.

Some effort is being made at government level to ease the burden of energy bills on low income households. For example, the Scottish Government this week pledged to boost its energy assistance package in the coming weeks. Help with insulation and heating system upgrades is to be extended from those in properties with F and G-rated energy performance – the least energy efficient – to properties with an E rating, while funding for cavity wall and loft insulation for those in social housing will be boosted by an extra 2.5 million.

Mike Thornton, director for the Energy Saving Trust in Scotland, said: "As the winter approaches it brings into focus the harsh reality of living in an energy inefficient home. The extension of the energy assistance package will provide help to householders across Scotland who find it hard to heat their home."

But more needs to be done, said Graham Blount, chair of the Scottish Fuel Poverty Forum. "The 2016 commitment was a brave one. We need to keep working together – and that includes both the Scottish and UK Governments – and crucially we need more investment, to get there and save more Scots from more years of fuel poverty."