Everyone knew it was going to be a shock but the true scale of increases in this winter’s energy bills has left a large number of people in real financial distress. People who have been in touch with The Irish Times talk about the bill amounting to 50 per cent of the family’s household income, a burden that no one is likely to be able to cope with.
The irony is that these bills are arriving even as people are reading about dramatic falls in the wholesale price of energy in the months running up to the end of last year.
Yet while prices do look like they might have peaked, there is no immediate suggestions that they will fall rapidly. Only one provider, Pinergy, has flagged that prices will fall by about 7 per cent but not until the end of March. Electric Ireland, meanwhile, said it was cutting prices, but only for business customers.
And, as usual, those worst affected by the surging bills are the most vulnerable – older people on limited incomes, the less well off, many of whom are relying on welfare benefits to top up their income, and those starting off in life at a time when they are juggling huge mortgage bills and possibly the often equally burdensome cost of childcare.
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So what should you do if a bill lands in your door or you email inbox that you simply cannot pay?
One bit of advice above all others: don’t ignore it.
All the energy providers have specific support structures for people in financial distress and staff who are specially trained to deal with such situations. But if they don’t hear from you, they cannot really help you.
Suppliers are required to try to contact you at least four times before moving to disconnect you but the temptation is always to ignore such unwelcome calls. Don’t put it off as the problem is only likely to get worse if arrangements are not put in place. Contact your supplier and explain that you are having issues paying your bill.
There is a moratorium in place on disconnecting private residential customers. No matter how dire your position, the suppliers have agreed with the regulator not to cut people off during the winter months.
However, this moratorium period is coming to an end. Agreed between the suppliers and the Commission for the Regulation of Utilities, It normally ends in mid-January. Anticipating the greater difficulties likely to arise this year, it was originally extended to the end of last month but that was subsequently pushed out to the end of March. Welcome though it is, that is just four weeks away.
And you don’t want to leave it till the last minute to try to get your affairs back in order, not least as there are likely to be a lot of people looking to do so at that time. That will put pressure on the staff dealing with debt issues at the various energy suppliers with the inevitable lengthening of waiting times on helplines.
There are a couple of things worth knowing when you are talking to your electricity or gas supplier. One of the most useful is that that suppliers are now required to offer customers debt repayment plans that give them two full years to get their accounts in order.
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Until this winter, the time allowed was up to the individual supplier: now it has been agreed by all of them with the regulator.
Prices will come down so if you are someone who can normally meet your energy bills, spreading repayments over this 24-month window might be all you need to do.
The regulator says suppliers must offer customers a range of payment methods and, for those in arrears, practical payment plans that take into account the customers circumstances and are reasonable and affordable.
This may include offering you a prepay meter or, in certain cases, a financial meter. You do not necessarily have to accept these proposals. If you are really only talking about one winter bill that has gotten away from you, it is unlikely that they would be appropriate but in any case, you would be advised to take advice from someone like MABS – the Money Advice and Budgeting Service – before doing so.
If you are on a financial hardship meter, the regulator has now insisted suppliers must put you on the cheapest energy price that they have available at that time. This only came in last December: before that, astonishingly, suppliers could refuse these customers in the most fragile financial position access to discounted tariffs.
Another change this winter, implemented last October, is that suppliers can no longer take as much from people in debt who agree to use pay as you go meters. Before this, a supplier could take a quarter of every top up you made on your meter to pay down debt; that has now be reduced to 10 per cent.
Another option for people struggling to pay winter bills can be to agree a level pay structure with your supplier. This already happens with some fuel suppliers Essentially, they look at your recent bills to assess what, on average you spend over the course of a year and then break that down into 12 equal monthly payments.
While it certainly means you will be paying more for your gas or electricity in the summer than your usage at that time would merit, it does make it easier for those on fixed incomes to budget and avoids nasty winter shocks.
And if you are also implementing measures to reduce your electricity or gas use – by turning down thermostats and unplugging items when not in use, for instance – make sure to get your level pay amount assessed every year.
If you are on welfare benefits or now in receipt of social welfare but on a low income, you may also qualify for what is known as an additional needs payment. This is not purely focused on winter energy bills: it can cover anything from funeral costs, travel costs to hospital appointments or even the price of furniture as you try to set up your first home. But it does also relate to the increased cost of heating and electricity.
There is not set rate of payment. If approved, a payment would be based on your weekly household income and the particular nature of your financial need. You need to fill out an SWA1 supplementary welfare allowance form.
The key message is that there are various ways that you can get help to deal with an unmanageable bill but don’t hide your head in the sand. If you’re in trouble, contact the supplier and possibly also MABS.
You can contact us at OnTheMoney@irishtimes.com with personal finance questions you would like to see us address. If you missed last week’s newsletter, you can read it here. Also, to ensure you continue to receive On The Money, be sure to add the email address you receive the newsletter from to your safe senders list.