Growing debt and trust in energy companies
UK households owe more than £637m to energy suppliers an increase of £159m on the previous year.
More than 5m homes owe money to their supplier, a 6% increase over the last year. In Scotland more than 170,000 people are in debt to one or more of their utility providers, according to research by the Debt Advisory Centre Scotland. They also found that 1.1 million bill payers in Scotland have ignored a bill in the past because they were unable to pay it.
People who pay by PayPoint across the whole of the UK were more likely to be in arrears. A total of 27 per cent of PayPoint bill payers were in debt to their water companies, compared to only two per cent of people who pay via direct debit. This was echoed in electricity where 18 per cent of PayPoint payers are arrears, compared with 2 per cent of people paying by Direct Debit, and gas where 16 per cent paying by PayPoint are in debt, compared with 3 per cent paying by Direct Debit.
Shadow energy minister, Tom Greatrex MP argues in the Utility Week blog argues that energy companies have lost consumer trust, he said: “That is why it is imperative for the energy market to work better in the interests of consumers – and for those paying the bill to have the expectation that they are clear about what they are paying, and why. If the structure of the energy market is not allowing that level of transparency, then it is the responsibility of the government to address those issues. As well as being in the consumer interest, it is also no bad thing for the energy companies too.”
Public trust was also a theme in National Grid’s call today to make the public case for energy investment. Janine Freeman, head of EU and UK public affairs at National Grid said: “The headlines are about energy prices. But there are issues about security of supply, jobs and the economy, protecting the environment, climate change, harnessing new sources of generation, energy efficiency, smart meters… the list goes on. Consumers are confused about priorities; feeling powerless; unsure about who to trust… We need to make the public case for energy infrastructure – to raise awareness of the wider benefits – to increase public acceptability and rebuild trust. Without this, there will be unnecessary delays and uncertainty to construction programmes – putting at risk investment in the delivery of our future energy needs. This will ultimately end up costing the consumer or tax payer more – and put at risk the UK’s ability to maximise the wider economic growth benefits.”
Others call for a more radical solution. Kelvin Hopkins MP has tabled an early day motion in Parliament calling for the renationalisation of gas and electricity and the setting up of a publicly owned national energy corporation. Hopkins’s motion condemns the energy companies – over 50 per cent of which are foreign owned – for exercising a “powerful and malign influence over government energy policy focusing on large-scale energy production and energy sales to maximise profits rather than investment in energy conservation and renewables” and states that “a publicly owned and publicly accountable national energy corporation incorporating the grid as an integral component would be best placed to plan for and serve Britain’s vital long-term energy needs both in national economic and social terms.”
Neil Clark, of the Campaign for Public Ownership highlights many examples of how energy companies ‘rip off’ the consumer in his Morning Star article, arguing that it is time to end, “this grotesque corporate rip-off and renationalising the energy sector.”