Energy firms can warn rivals about 'debt hoppers'
Published 24/09/2011 | 05:00
ENERGY companies will be allowed to inform rivals if a customer has built up substantial arrears on their gas or electricity bills.
The move announced yesterday by the Commission for Energy Regulation (CER), headed up by Michael Tutty, will tackle the issue of "debt hopping" where customers switch suppliers to avoid paying off their debts.
From next month, energy companies will be allowed to warn a new supplier if customers owe more than €250 for over 60 days.
However, they will not be allowed to block people from switching to another supplier until they have paid off their original arrears, which was the preferred option of utility companies.
Instead, the new supplier will be able to assess if it considers the new customer to be a debt risk, or if it wishes to take them on anyway.
Energy debt has become a huge problem for most suppliers with more than 100,000 customers behind on gas or electricity bills and nearly 8,000 households which had power switched off in the first six months of the year.
The regulator also ruled that dual fuel energy companies can only share information about arrears in the particular energy supply being switched.
This means they cannot pass on details about electricity debts if the customer is seeking to switch gas supply, and vice-versa.
CER said it had made the decision because of concerns from energy suppliers and consumer groups that debt levels were rising as customers changed to new suppliers, meaning they had little incentive to pay off past debts.
"This practice of 'debt hopping' is considered to raise costs for energy suppliers and consequently for all consumers, and further compounds an individual's debt situation, making it more difficult to manage in the long run," the regulator said.
However, it warned that customers could not be flagged indefinitely, and suppliers could not raise a flag if the customer was pursuing a formal complaint about the amount owed.
CER said the Money Advice and Budgeting Service had stressed the need for domestic customers to be able to access cheaper energy offerings on the market.
For businesses, the higher threshold at which debt levels can be disclosed will be between €750 and €1,500.