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The Government is threatening to force Britain's big six energy companies to offer the cheapest deals to their poorest customers if they do not do so voluntarily.
While many of the energy suppliers offer so-called social tariffs — cheaper deals for those spending more than a tenth of their income on energy bills — consumer groups have found that they are often not the least expensive deals available.
Ofgem, the energy regulator, issued new guidelines yesterday that require all social tariffs to match the supplier's cheapest deal. The announcement comes as the six leading energy companies prepare to increase prices next month by as much as a third after a steep rise in wholesale gas prices.
About 4.5 million British households are regarded as living in fuel poverty — a figure that could rise by one million this year.
John Hutton, the Business Secretary, has in the past insisted that Britain's energy companies should help to address fuel poverty by offering social tariffs. Under an agreement he struck with the industry, the amount of money spent on social programmes to help the poorest heat their homes will treble, lending a hand to the 100,000 households that cannot afford to keep their homes warm in the winter.
Sources said that the companies were expected to follow the new guidelines. However, one gave warning that if they did not, the Government would legislate to force them to do so.
Mr Hutton said: “It is essential that deals marketed as help for the poorest people actually provide the lowest prices. This new guidance brings clarity to vulnerable customers and means they can be sure they are getting the best possible deal.
“This is a significant boost to the billions already spent by Government and the energy companies and means we can now get this vital extra support to the people who really need it in time for the coldest months this winter.”
The big six energy companies are awaiting the outcome of an investigation by a Commons select committee into competition in the UK energy market. The Business and Enterprise Committee is due to publish the conclusions of its report on Monday and many in the industry fear that it will call for a Competition Commission inquiry into the sector, which is already under scrutiny from Ofgem in a separate investigation.
Ofgem said that none of the six leading energy companies were fully compliant with the new code, although some were better than others.
The challenge of targeting existing help to tackle fuel poverty more effectively was the theme of Ofgem's Fuel Poverty Summit in April.
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The real problem is this.....We export gas in the summer and import in the winter,,Why? Because we only have storage for 18 days..Unlike France which has 122 days storage capacity....When was the last time you saw a gas tank?...The link to the high oil price is artificial....There is no relation.
Martin, Aberdeen, Scotland
Why not get the people who are in so called "fuel poverty" to put on an extra pullover, and/or, if they are living on their own (as many of them probably are) give them modest financial incentives to encourage them to move in with friends/relatives so fuel cost can be shared.
Tim, Cranleigh, Surrey
Why not just impose a price freeze,these energy companies have made enough money from us since privatisation ,it's time they took the hit.
Kenneth O'Boyle, Perth, UK
Here we go again. The government is overborrowed so it can't afford to pay proper benefits to the poor. What do they do? They force the rest of us to pay. It's just another wretched Labour tax. A more honest approach, and one that would be proportional to ability to pay, would be to increase tax.
Colin, shrewsbury,
Why the hell should some consumers be forced to subsidise others just because the government says so? Prepayment costs more to administer than credit so should cost more. This is effectively another stealth tax on credit customers as the government will avoid increased spend on the "fuel poor".
Chris, Royston, England