Energy suppliers want to stop ‘debt-hopping’ by customers

GAS and electricity companies want new measures to stop customers switching energy suppliers to avoid paying outstanding bills.

Several of the country’s biggest energy suppliers have complained about the growing problem of “debt-hopping” by customers who change providers before they have settled their arrears.

They have expressed concern to the Commission for Energy Regulation (CER) that the problem is resulting in higher amounts of customer debt because of the economic climate.

Companies including Bord Gáis have requested the commission to introduce “debt blocking” measures to prevent business customers from abusing the ability to switch suppliers to avoid paying their debts. Similar restrictions already apply to gas and electricity business users in the North.

Energy suppliers have suggested that businesses with arrears of €500 or more should not be allowed to switch until they have settled any outstanding debt.

They believe existing debt management tools are ineffective, while they claim many customers are prompted to change their energy provider when they receive a warning that they may be disconnected for not paying their bills.

Gas and electricity firms claim they frequently have to initiate costly legal proceedings to recover debts because there are restrictions on the disconnection of supplies from customers.

The CER has invited submissions from interested groups and the public on the possibility of imposing new restrictions on customers wishing to switch suppliers. However, it is not considering introducing such measures on householders for the moment.

A CER spokesperson said it is concerned that the introduction of “debt blocking” measures could create the potential for abuse of the system, while it could also be incompatible with EU legislation that requires customer switches to be facilitated with the minimum of delay.

The Irish gas and electricity markets were designed to encourage switching and to ensure that the existing suppliers did not try to win back customers before the switch had taken place, he said.

The commission said information it had received from energy supplies outlining the scale of bad debts was “incomplete”.

In 2005, the commission resisted efforts to introduce some form of “debt blocking” in advance of the increasing deregulation of both electricity and gas markets.

A Bord Gáis spokesperson said yesterday that it would welcome the introduction of some “debt blocking” measures.

An ESB spokesperson said it had not called for “debt blocking” because as the supplier of last resort it could not refuse providing electricity to customers on the basis of a bad debt history.

It is estimated that around 500 ESB and Bord Gáis customers are now being disconnected every month because of their failure to pay their bills.

Bord Gáis confirmed between 350 and 400 customers, mostly householders, are being disconnected for non-payment of arrears, while ESB estimated it has cut off supplies to around 4,000 customers so far this year.