Pre-rule change, customers whose debts exceeded £200 were not able to switch to an alternative provider until their debts were paid off. The barrier has now been moved to £500 meaning those customers with greater debt will now be able to switch without any problems.
The reason the government has backed the idea is that with a quick comparison of providers, customers in tight positions could identify the provider who would give them more of a discount. This would save them money in general and give them more chance of paying off unpaid debt.
The big six companies involved include British Gas, EDF, Eon, SSE, Scottish Power and npower. The idea was generated by the sector’s watchdog; Ofgem and was initialised with the aim of lowering the amount of households and businesses who are being cut off as a result of their debt.
Currently, there are around 320,000 gas and 315,000 electricity customers who have outstanding debts with energy suppliers.
Ofgem has reported figures already that show the operation could result in a fall of electricity disconnections to the tune of 54% and a drop of disconnected gas customers by around 59% and this is all because of the amount of extra time given to pay off debts.
A senior partner for sustainable development at Ofgem, Sarah Harrison explained that “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.”
Research carried out by business finance experts makeitcheaper.com shows that minor energy companies are hearing a lot more praise than the national giants and that their customer service is the key feature.
Any business looking to make the most of the new threshold change should be looking for cheaper business electricity from Make It Cheaper and other online help centres and tools that allow a level of comparison between providers