Energy companies under fire over deposit demands

BORD GÁIS and the ESB have come under fire for what has been described as an “abuse of a position of dominance” for asking vulnerable families for upfront cash payments of €400 and €300, respectively, before making new connections.

The gas company will not connect homes, which have not had a previous account with them, to the network without a security deposit of €200 from direct debit payers. However, anyone who cannot pay by direct debit has to pay double that before they can be connected to the gas system.

Meanwhile, the ESB demands a €300 deposit from new account holders before making an electrical connection to a home, if the customer cannot pay through their bank account.

“It’s penalising people for no other reason than they can, because they need a supply,” said Consumer Association of Ireland boss Dermott Jewell.

“It’s an abuse of a position of dominance. It’s not as if we’re a highly competitive market, because we’re not.”

Describing the charges as “penal levies”, Mr Jewell called on Bord Gáis to introduce positive incentives for new accounts, such as discounts, rather than upfront payments. “In October 2008, post-budget, this kind of approach is really archaic and unacceptable.”

The Money Advice and Budgeting Service (MABS) has lobbied Bord Gáis, the ESB and the Commission for Energy Regulation on the issue in a bid to get the security deposit payment lowered.

“For people on a low income or on social welfare, it’s quite onerous to try and come up with that kind of cash,” said MABS spokesman Michael Culloty. “Very often, people on low incomes will find it very difficult.”

The first half of 2008 saw 1,177 cash-stretched clients contacting MABS because of problems with energy bills — up from 1,006 during the same period last year — with an average debt of more than €800 to utility companies. MABS believes the debt levels would be even higher but for a more proactive recent approach by the companies to bad debts.

Bord Gáis said the security deposit system is in place because they bill customers in arrears for gas already used. “At any given time, in the winter period, the first bill could be in that order,” said head of corporate affairs Kathleen O’Sullivan.

Asked if the amount demanded from customers was too high, she said: “It’s just unfortunate in terms of managing debt that we do need deposits. Unless they have a record with us. Basically, we’re giving customers credit and, unfortunately, that’s the level that’s necessary as a security deposit.”

Clients can apply for a refund after 14 months of their account being “run properly”, she said. ESB customers are also refunded after 14 months if their credit terms are compliant.

An ESB spokesperson confirmed that if a customer looking for a new connection doesn’t have a previous record with them they will ask for a €300 deposit. Householders who choose to pay by direct debit don’t have to pay any deposit, she said, and they take a “sympathetic” view towards their customers.


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