Energy firms to cut prices for homes in arrears
Published 25/04/2011 | 05:00
GAS and electricity companies will be obliged to offer their lowest-price packages to so-called 'vulnerable customers' under new rules to be introduced by the Commission for Energy Regulation (CER) .
Suppliers will have to allow customers who are 'vulnerable' to disconnection -- including older people, those with a disability or people in financial difficulty -- to avail of the cheapest price plans even if they have outstanding bills.
The move comes after ESB Electric Ireland was criticised earlier this month for refusing to allow customers in arrears to benefit from its lowest prices.
The company later bowed to pressure to extend discounts on electricity and gas prices to customers who were making a genuine effort to clear their debts, including installing a meter to control electricity use and engaging in instalment payment plans.
The decision is contained in a new Consumer Protection Code, which will come into force later this year.
The CER said companies would be obliged to tell a customer who wished to switch to a new tariff exactly what the savings would be, and if a better deal was available to them.
Customers who choose to pay by direct debit often enjoy better discounts. If, for example, a customer falling into the 'vulnerable' category wished to pay by direct debit, the company would be obliged to give them the best prices.
The code follows deregulation of the domestic electricity market on April 4.
The commission said it was CER's duty to "ensure adequate safeguards to protect vulnerable customers", and the code would protect customers from excessive tariffs.
"The CER has decided that suppliers will be required to ensure vulnerable customers are on their most economic tariff rate for the customer's chosen payment method. This requirement will be included in the vulnerable customers' code of practice," it said.
The commission added an exact definition on a 'vulnerable' customer was being developed by the Department of Energy, as required by EU law.
A survey carried out for the CER found that while competition in the market was strong, knowledge of electricity pricing was still low among consumers and a small but growing number of people had not realised the savings that they expected in switching.
The commission is also considering if suppliers should publish all existing prices in a straight forward manner to allow for easier price comparison.