Fears of ‘aggressive’ debt collecting for energy bills

Citizens Advice are warning that thousands of households are at risk of being hounded by ‘aggressive’ debt collectors chasing money owed to 11 small energy suppliers who have all gone bust in the past year and a half.

In a new report entitled ‘Picking Up The Pieces’ the charity says that 32,000 households in debt to the defunct suppliers could be chased by the administrators who took over the companies.

Competition

The firms, which were all set up after the government encouraged competition in the supply industry, are:

  • Brilliant Energy
  • Economy Energy
  • Extra Energy
  • Spark Energy
  • Future Energy
  • National Gas and Power
  • Iresa Energy
  • Gen4U
  • Usio Energy
  • One Select
  • Electaphase Energy.

When suppliers fail the regulator, Ofgem, appoints a new provider for their customers while administrators step in to try to resolve the issues which led to the supplier going out of business.

Debts

But if those customers owe money to their former supplier it is up to the new provider if they are prepared to take those debts on. If they refuse to do so that could lead to the administrators chasing the customers for the cash.

Citizens Advice are concerned that the administrators are not bound by the same rules as the suppliers and can pursue debts more vigorously and say customers can be asked for the cash at very short notice and find that the amount owed has gone up overnight.

Since January 2018 the charity has helped more than a thousand people with debt issues averaging £250 relating to failed suppliers

Concerned

The charity is also concerned that consumers may find themselves having to pay the £172 million cost of their former suppliers going out of business because other energy suppliers have to foot the additional costs for renewable generation, infrastructure and metering when a supplier goes under.

The fear is that those costs will be passed onto consumers through bigger energy bills and debt collection from customers who owed the failed firms cash.

Collapse

Chief executive Gillian Guy said: “Consumers shouldn’t have to foot the multimillion-pound bill left behind when companies collapse and they certainly shouldn’t lose their usual protections in the process.”

The charity is now asking the government to use the forthcoming Energy White Paper to resolve the issues and ensure consumers are protected by making sure administrators have a duty to consider consumer interests and follow the same rules as suppliers.

Perfect opportunity

Said Ms Guy: “The Energy White Paper is the perfect opportunity for the government to close the gap in protections and limit the cost to consumers of any future supplier failures. It must act now.”

Ofgem spokeswoman Philippa Pickford said: “Competition in the energy market has helped to drive down prices for consumers.

Ofgem introduced new tests this summer for companies applying for a licence to supply energy, to help drive up standards, ensure they meet their industry obligations and reduce the risk – and cost – of supplier failure.

Tougher rules

“Ofgem will also consult in the autumn on tougher rules for existing suppliers. Under Ofgem’s safety net, if a supplier fails the energy supply and credit balances of its customers are protected.

“We agree with Citizens Advice that this process has generally worked well and we are looking at ways of improving the experience of these customers when they are transferred to new suppliers and to reduce costs associated with supplier failure.”