Energy watchdog threatens action against suppliers

14 October 2008

Energy watchdog Ofgem has warned energy suppliers that they may have to cut prices and pay compensation to millions of customers who have not paid by direct debit or do not benefit from ‘dual fuel’ price plans.

The regulator has said it is considering new ‘licence conditions’ if energy providers do not voluntarily reduce the cost to such customers.

Energy companies have come under fire in recent years for adding ‘surcharges’ to bills for customers who do not pay by direct debit. There has also been some controversy surrounding bills that undercharge direct debit customers, thus landing them in arrears and potentially tying them to their existing providers until the arrears are paid off.

A spokesperson for Think Money said: “Energy providers have often been criticised for charging their direct debit customers differently to those who choose to pay by other means. In many cases this has meant customers going into debt on their accounts, which they might have been able to avoid had they been on a direct debit plan. “But not everyone likes paying by direct debit – some people prefer to pay by cheque or in cash, as they may feel this gives them greater control over their finances.

“Hopefully Ofgem’s words will prompt energy suppliers to amend their charging strategy, and we will see fewer customers struggling with debt because of their bills.”

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