People who switch energy firms will have debt flagged

CONSUMERS WHO attempt to switch electricity or gas companies before settling outstanding bills with their original supplier will have the debt flagged to the new provider following a ruling by the industry’s watchdog yesterday.

Energy companies such as Airtricity, Bord Gáis and the ESB are dealing with increasing numbers of customers and businesses who switch suppliers and leave bad debts behind.

Yesterday the Commission for Energy Regulation said it has decided to allow the original supplier to inform or flag the new supplier if the customer has not paid their electricity or gas bill.

The ruling will apply to consumers who are 56 days in arrears with bills of €200 or more.

It will apply to businesses that are 28 days or more overdue with bills of €500 or more.

The regulator’s decision will apply to consumers and small and medium-sized businesses. Companies have until January 1st, 2013, to implement it. The industry will also have to ensure that the system complies with data protection legislation.

The regulator acknowledged yesterday that the practice of switching suppliers and leaving arrears unpaid, which is known as “debt hopping”, is a problem for energy suppliers and ultimately increases costs for the companies and consumers who pay their bills on time.

Its ruling added that flagging was recommended by organisations such as the St Vincent de Paul and the Money Advice and Budgeting Service, both of which work with households who have problems making ends meet, and by a number of companies.

State company Bord Gáis welcomed the announcement yesterday, but said customers should be blocked from signing up with a new supplier until they have cleared their outstanding debt to the original provider. Jason Scagell, the company’s director of retail, said this would be a fair solution for suppliers, as it would cut their debt-management costs, and customers, as it would help prevent their debts from “spiralling out of control”.