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More than 2m PAYG households at risk of energy self-disconnection

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Energy company Utilita’s CEO Bill Bullen has issued a white paper saying that the Government needs to intervene to stop people from dying this winter because they can’t afford to heat their homes.

In Bullen’s statement to the Department for Business, Energy and Industrial Strategy (BEIS) and the Office of Gas and Electricity Markets (Ofgem), Bullen called for energy suppliers, BEIS and the Department for Work and Pensions to work out a simple strategy to keep households with prepayment meters from feeling they need to disconnect.

His statement came just before Fuel Poverty Awareness Day, a label created by National Energy Action, a group which estimated there are 6.7m British households currently living in fuel poverty. The NEA has expressed support for the capacity of smart meters “to end estimated billing, to provide greater control over personal energy use, and to make payment for ‘pay as you go’ energy much more convenient.”

Bullen, meanwhile, also called suppliers to prioritise installing smart meters for all legacy pay-as-you-go (PAYG) energy households and to end what he called misleading information about switching to a smart meter. He also said PAYG suppliers should join Utilita by not charging a separate standing fee to low, or no, usage customers.

The Government considers someone to be in fuel poverty if their disposable income (after housing and fuel costs) is below the poverty line. It said in February that 13.2% of households in England were fuel-poor in 2020 and that families who pay their energy bills by prepayment had the highest rate of fuel poverty (30.6%).

‘Welfare system is at fault’ for self-disconnection

Bullen said 2.25m PAYG households were at risk of self-disconnecting with no assistance from their power companies.

“Unless the customer has refused a smart meter”, he said, “there’s no excuse for legacy meters to exist today. Having no choice but to sit at home without heating or light is unacceptable and our government and the regulator must intervene immediately to stop self-disconnections for good.”

Sasha Dixon, who leads Utilita’s Extra Care Team of workers who handle hundreds of calls from vulnerable customers, said: “Speaking to tens of thousands of low income and vulnerable households each year, the common theme on every call is debt avoidance. For these households, Smart PAYG helps them to avoid bill shock and gives them access to interest-free financial assistance should they need it. In the event that we offer to switch these households to credit mode, most are horrified at the thought of it, and refuse it.

“I know these households well enough to say that if they were forced onto credit mode many would sit in the cold and dark out of fear of running up a large bill they cannot pay. Self-disconnection is not a fault or a result of the payment method – self-disconnection happens because of low income and for that the welfare system is at fault.”