Energy firms to be forced to help the poor

Energy suppliers will be forced to help poor people struggling to pay their fuel bills for the first time under new proposals to be announced this week, The Independent has learnt.

At present the Big Six suppliers subsidise bills of the poor and elderly paying a high proportion of their income on gas and electricity under a system of voluntary ‘social tariffs’.

In a new Energy Bill in the Queen’s Speech on Wednesday, central Government will enshrine the scheme in law and set how much suppliers have to spend on social support.

The Bill will also hand greater powers to intervene in the energy market against companies that fail to act in consumers’ interests.

Ministers hope the new legislation will increase the amount of social support as bills rise over the next 10 years to fund Britain’s transition to a low-carbon economy.

All energy suppliers will be required to contribute proportionately the same amount to social tariffs amid signs that some have been less generous than others.

In a report last year, the now disbanded Energywatch consumer group found that British Gas, Npower, E.ON, Scottish and Southern, Scottish Power and EDF spent only £28m a year on ‘social tariffs’, one thousandth of their £24bn annual turnover.

British Gas was the most generous, contributing 1.74 per cent of its turnover on social tariffs compared with the foreign-owned Npower and Scottish Power, who respectively gave 0.04 per cent and 0.1 per cent.

A Government source said the new system would come into effect once the voluntary agreement ended in 2011.

"The principle is that with upward pressure on prices the vulnerable need help,” a Government source said.

The Bill will strengthen Ofgem’s power to act on behalf of consumers. The regulator has been criticised for being too lenient on suppliers, though its stance has toughened in the past 18 months. In August Ofgem’s chief executive Alistair Buchanan wrote to the chief executives of the Big Six asking them to outline when they would pass on falls in wholesale costs.

Suppliers raised power prices by about 42 per cent last year, or about £382 per household, but have lowered them by only 4 per cent to an average of £1,141 this year. Over the same period wholesale costs have halved.

Suppliers say they are locked into long-term contracts at higher prices and have been hit by higher bad debts and environmental charges.

A Government source said the new legislation would allow Ofgem to respond more aggressively to competitive failings.

"It's about making sure that we have a speedy response to problems,” the source said.

“Sometimes Ofgem's tendancy has been to say: 'This is not working properly, there are barriers to competition and things will sort themselves out when we remove those barriers.' We now know that the present pressures on consumers are too great to leave that to take its course.”

The source added: “You may well see more active intervention – modifications to licences or crackdowns on breaches of licence conditions."

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
News
i100
Travel
Suite dreams: the JW Marriott in Venice
travelChic new hotels in 2015
Arts and Entertainment
Sink the Pink's 2013 New Year's Eve party
musicFour of Britain's top DJs give their verdict on how to party into 2015
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Ashdown Group: Senior Marketing Executive- City of London, Old Street

£40000 - £43000 per annum + benefits: Ashdown Group: Senior Marketing Executiv...

Ashdown Group: Marketing Manager

£40000 - £43000 per annum + benefits: Ashdown Group: An international organisa...

Ashdown Group: Internal Recruiter -Rugby, Warwickshire

£25000 - £30000 per annum: Ashdown Group: Internal Recruiter -Rugby, Warwicksh...

Day In a Page

Aren’t you glad you didn’t say that? The worst wince-and-look-away quotes of the year

Aren’t you glad you didn’t say that?

The worst wince-and-look-away quotes of the year
Hollande's vanity project is on a high-speed track to the middle of nowhere

Vanity project on a high-speed track to nowhere

France’s TGV network has become mired in controversy
Sports Quiz of the Year

Sports Quiz of the Year

So, how closely were you paying attention during 2014?
Alexander Armstrong on insulting Mary Berry, his love of 'Bargain Hunt', and life as a llama farmer

Alexander Armstrong on insulting Mary Berry and his love of 'Bargain Hunt'

From Armstrong and Miller to Pointless
Sanchez helps Gunners hold on after Giroud's moment of madness

Sanchez helps Gunners hold on

Olivier Giroud's moment of madness nearly costs them
A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect