NEA: New payment method could reduce cebt and the misery of fuel poverty, says national charity

Monday, 3 August 2009 12:00 AM

A new way of paying for fuel could help thousands of people avoid falling into the fuel poverty trap, according to leading charity National Energy Action (NEA).

A new NEA report, funded by the Money Advice Trust and published today, gives details of a new payment model that NEA says would help vulnerable households better manage their fuel bills, greatly reducing the risk of fuel poverty and fuel debt.

NEA believes that by combining schemes that are already in use such as Fuel Direct, simple accessible cash accounts and direct debit payments that open up preferential tariffs, the numbers of people experiencing difficulty in paying their fuel bills could be significantly reduced.

Although recent action by energy regulator Ofgem has seen unfair payment differentials associated with pre-payment meters reduced they still do not offer the best deal, costing up to £290 a year more than the best online tariffs.

This leaves many poorer households out of pocket as they are less likely to have access to the internet and may not have a bank account so cannot take advantage of direct debit discounts.

Significant increases in fuel prices over recent years and the surge in redundancies due to the ongoing credit crunch, has pushed the number of households in fuel poverty, defined as when a household is required to spend more than ten per cent of its income on total fuel use, to almost five million.

Maria Wardrobe, Director of Communications at NEA said: "It is vital that vulnerable households are not paying more for their fuel because an optimal payment method has not yet been developed.

"It's essential that consideration is given to other payment methods in order to improve access to the energy market and the lowest available tariffs, giving back control to the end user through their improved financial and social inclusion".

Joanna Elson , Chief Executive at the Money Advice Trust said: "At National Debtline we've seen almost a tripling of the proportion of clients with fuel debts in the last three years and other advice agencies have seen a similar trend.

With five million families across the UK in fuel poverty we clearly need to look at ensuring payment methodsfor fuel are as affordable as possible. This research is a useful contribution to that debate".

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