The Energy Minister thinks encouraging people to switch will cut bills, but it’s not always that easy
The People’s Champion
The energy industry and the Government have decided that if everyone switched gas and electricity suppliers, then heating and lighting our homes would become more affordable for all.
In fact there are savings of as much as £200 per household up for grabs. To reinforce that, the regulator Ofgem this week launched a high-profile “Be an Energy Shopper” campaign, supported by the Energy Secretary, Ed Davey.
The watchdog claims recent reforms have led to a simpler energy market which should mean it’s easier to find a better deal. And to counter worries that energy charges are too confusing and that shopping around for energy is too much hassle, it has set up a guide at www.goenergyshopping.co.uk.
Launching the campaign, Mr Davey said: “Making the switch is easier than ever before, and the ‘Be an Energy Shopper’ campaign gives consumers practical advice on how to shop around and get the best deal for their energy use.”
The Minister even referred to his own experience: “Having made the switch myself, I would encourage anyone who hasn’t already done so to check whether their current supplier is giving them the best deal – and if it isn’t, switch.”
Good advice, I’d say, but not practical for all. While most people would probably benefit through cheaper bills from switching, not everyone can afford to.
Why? Because they’re in debt to their energy supplier and can’t always transfer the debt. This obvious point was drawn to my attention this week by a reader, Marion Warden.
“Those who need to switch the most are the poorer in society,” she pointed out. “For them to switch they would need to pay off any existing debt to their current supplier. That alone has stopped many.
“It’s amazing to me that no one has ever mentioned this as a cause. Maybe politicians and reporters can’t imagine ever being that hard up, but when you live from week to week or are on a pension, the debit of maybe £100 is just prohibitive.”
However just because you’re in debt to your current supplier doesn’t necessarily mean it’s impossible to switch.
People who find it hardest to pay their energy bills tend to be put on a pre-payment meter. Because they can’t use more energy without paying for it, suppliers know that they can’t increase their debt. Therefore they’re happy to accept those with manageable debt.
In fact, if you owe less than £500 and you’re on a pre-payment meter you should be able to switch to a cheaper deal. If you owe more than £500, you will not be able to switch.
If you’re on a standard meter and in debt to your supplier, it’s harder. But Ofgem says it is working with suppliers to minimise the number of switches blocked due to debt.
In my view it should work harder. The regulator – and the Minister – should ensure all can benefit from the cheapest bills, not just those who are able to avoid debt.
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