Two million households to miss out on promised energy bill cashback

Two million households to miss out on promised energy bill cashback (Telegraph, Aug 30, 2014):

Energy suppliers will start distributing £12 electricity bill rebate from October, but official forecasts show that 7pc of households will not get the cash

Almost two million households will miss out on an energy rebate promised by the Government, while many more will have to wait up to a year before they see any benefit, ministers have admitted.

Hundreds of thousands of people who are switching supplier or moving house are expected to lose out on the £12 rebate, as are many of the poorest households, according to official forecasts.

Consumers currently pay on average £12 a year on their energy bills to fund the Warm Home Discount scheme, which provides financial help for vulnerable customers.

But ministers announced in December that the Government would pick up those costs for two years through taxation, funding a £12 energy bill rebate this year and next to go “directly to customers”.

The move was part of a package of measures designed to help households struggling with rising energy bills by reducing “green levies”.

The Department of Energy and Climate Change (DECC) has said suppliers will be giving customers the £12 rebate “from around mid-October”.

But according to policy documents, 7pc of households – almost two million bill-payers – are expected to miss out on the rebate altogether.

The majority of households – some 15m customers who pay by direct debit – will not actually see £12 returned this year. Their payments will remain unchanged and the £12 will be factored in only when their supplier next reviews their account, which could be just once a year.

In an impact assessment on the Government Electricity Rebate, the DECC says: “Electricity suppliers have indicated there are delivery barriers which mean that in practice it may not be possible to ensure that all eligible customers would receive the rebate.”

Customers in the process of switching supplier or moving house at the time of the rebate may not be credited because their accounts are “in transit”. A “credible” estimate is that 678,000 households – about 3pc per cent of those paying by direct debit or standard credit – will miss out.

A further 4.1m households cannot automatically be provided with the rebate because they use prepayment meters, so will be sent vouchers instead. These customers are typically the poorest households, and the DECC says it expects 30pc of recipients – more than 1.2m households – will not complete the necessary steps to claim their cash.

The document also explains that suppliers will “not be required to ensure an immediate impact on their direct debit customers’ bills”. The £12 will instead be deducted from their account balance and customers “may not feel the impact of the rebate until the point at which suppliers reconcile [these accounts]”.

The impact assessment shows that distributing the rebate will cost suppliers an estimated £9.5m – about 33p per customer – this year, which will ultimately be borne by bill-payers.

Another option would have seen suppliers obliged to take more steps to ensure pre-payment customers actually got the cash, and would have ensured “a tangible impact” on direct debit customers’ bills by giving them “£12 off their very next payment”. Ministers rejected this as it would have cost three times as much to implement.

Caroline Flint, Labour’s shadow energy secretary, said: “This rebate is coming straight from taxpayers’ own pockets, in a desperate attempt by the Government to say that they’re doing something on bills.

“And the Government’s own figures now show that many, including some of the most vulnerable households, won’t even receive this money.”

The £12 rebate formed part of a package to reduce energy bills by £50 this year, compared to what they would otherwise have been.

The other £38 of savings were implemented through cuts or changes to suppliers’ tariffs at the start of the year.

But four out of the Big Six suppliers have refused to pass on the cut to millions of households on fixed-rate tariffs, despite ministers’ insisting this was “not acceptable”.

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