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New 'Switch And Save' Option On Energy Bills

(c) Sky News 2012

Customers who are struggling with their energy bills will find it easier to switch suppliers under new rules.

British Gas, EDF (Paris: FR0010242511 - news) , Eon (Taiwan OTC: 3411.TWO - news) , SSE (Frankfurt: A0RFBG - news) , Scottish Power and npower will allow their customers on prepayment meters to switch if they have debts of up to £500 - an increase from the current £200 limit.

It is one of a number of changes planned by the industry regulator Ofgem to encourage suppliers to work more effectively with households to resolve debt issues and use disconnection as a last resort.

There are some 320,000 gas and 315,000 electricity customers with prepayment meters who owe money to their supplier, according to Ofgem, and it is thought tens of thousands will be helped by the move.

In most cases they racked up the debts when they were allowed credit and were slapped with prepayment meters as part of a repayment plan.

The increase in the threshold at which customers can switch will be backed by a drive from suppliers to raise awareness of switching and making it easier to switch.

Allowing consumers to switch should help them repay their debts more easily.

Ofgem is due to report figures next week that will show a 59% fall in the number of people disconnected from their gas supply and a 54% drop in electricity disconnections, partly as a result of people being given more time to repay debts.

However, the average amount of debt people are repaying on their gas accounts rose to £371 in 2011, up from £339 the previous year. Meanwhile, the average electricity debt fell slightly to £357.

Sarah Harrison, senior partner for sustainable development at Ofgem, said: "We are acutely aware of the increasing financial pressures faced by many consumers, particularly those who are in the most vulnerable circumstances.

"We welcome the significant falls in the number of households being disconnected, but Ofgem remains determined to ensure suppliers continue to focus on helping consumers manage their energy bills and reduce their debt.

"That's why we are pleased to announce a commitment from major suppliers which will permit tens of thousands more prepayment meter consumers in debt to choose the cheapest energy deal."

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