Expert critical of government’s energy bill saving deal

Professor Stephen Thomas of the University of Greenwich has accused the government of showing a lack of understanding of the problem of fuel poverty.

This week, Deputy Prime Minister Nick Clegg announced a new scheme which requires energy companies to tell customers which tariff best suits the needs of their household.

Ministers claim the scheme will save millions of customers up to £100 per year.

However, Stephen Thomas, Professor of Energy Studies in the university’s Business School, claims that the scheme has significant flaws.

“It will not help customers identify whether their supplier is charging significantly more than its competitors, for example,” he says. “Similarly it will not assist nearly 20 per cent of households in the UK that use prepayment meters. Consumers using these meters pay up to 20 per cent more for their energy than those paying by the best deal – invariably direct debit accounts operated online.”

Many consumers who use prepayment meters cannot use direct debit to pay their bills because they do not have a bank account or internet access, according to Professor Thomas. He also says that some households choose to pay as they use fuel to ensure they don’t encounter problems paying their bill.

Professor Thomas adds: “The real issue is whether there is any justification for such large differences between these two methods of payment. There are extra costs for the suppliers to operate prepayment meters. However, consumers using them pay in advance, have no meter to read, require no bills, and there is no risk that they will ever run up debts they cannot pay back.

“Until there is proper evidence that the differences are justified, the suspicion must be that the ‘Big Six’ energy suppliers are not addressing the problem of fuel poverty but are simply exploiting their most vulnerable consumers to bolster their profits.”

To find out more about the government’s agreement see: http://www.decc.gov.uk/en/content/cms/news/dpm_bestdeal/dpm_bestdeal.aspx

To find out more about Professor Stephen Thomas see:
http://www.gre.ac.uk/schools/business/about-us/departments/ibe/staff/Professor-Steve-Thomas

Story by Public Relations

Picture: Professor Stephen Thomas from the University of Greenwich.