Energy firms under pressure to do more on fuel povertySeptember 2008
Fuel poverty has become a more pressing business responsibility issue for energy companies in the past month as a result of large gas price rises imposed on their domestic customers.
With British Gas lifting gas charges by 35 per cent last month and others announcing double-digit increases, political pressure has increased on the companies to put a more robust system in place to help customers in financial difficulty. Official estimates suggest 2.5 million UK households are in fuel poverty, but the watchdog Energywatch claims that the figure is over four million.
Britain’s big six domestic energy suppliers – Npower, EDF Energy, British Gas, E.ON, Scottish Power, and Scottish and Southern Energy – recently agreed an increase in collective expenditure on their social programmes of £225million ($419m) over the next three years, bringing the annual spend to £150m a year on initiatives to help the fuel poor. But politicians, pressure groups and the industry regulator Ofgem say more needs to be done.
The most sensitive issue for companies is likely to be bringing charges for using pre-payment meters into line with standard rates. Pre-payment meters are typically used by poorer customers, but often cost £100 more than the average annual bill paid by direct debit. E.ON recently became the first energy company to match the prices of pre-payment meter customers and standard customers using the same amount of energy.
The government is also calling on companies to provide more help with home insulation.
MPs on the parliamentary business and enterprise select committee recently concluded that lower ‘social tariffs’ offered by companies to poor customers failed to reach the vast majority of them and were confusing.
The European Parliament is currently considering new legislation on the internal market in electricity and gas that would require ‘concrete measures’ on fuel poverty by energy providers, though nothing is likely to be agreed at least until the end of the year.
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