11th December 2008
Citizens Advice is calling on Phoenix Gas to urgently reconsider its policy of taking 70% of payments made via a prepayment meter by customers who are in arrears.
Derek Alcorn, Chief Executive of Citizens Advice stated:
"At a time of financial crisis, increasing living costs and increasingly cold temperatures this policy is indefensible. Prepayment meters are often installed when vulnerable people are already struggling to re-pay high fuel costs, and this practice is almost disconnection by stealth. The Government is committed to tackling fuel poverty but policies such as this that are only in the interest of the utility provider, not the public, undermine Government initiatives.
We have brought this issue to the attention of the regulator."
Many customers who are in financial difficulty have had a prepayment meter fitted to collect payment for gas usage. However, if the person is in arrears, Phoenix takes 70% of their payments to pay towards the debt which could mean that people are forced to ‘self disconnect’ because they cannot afford the payments for the arrears and gas.
Citizens Advice has been informed by a client that they have had to move in with a friend as they can no longer afford to heat their home. (See case studies below.)
In England & Wales the rate for Fuel Direct deductions for those people in receipt of Income Support is £3.05 a week. Phoenix Gas sets a minimum rate of £5 per week at the outset for someone in receipt of Income Support.
Therefore the deduction rate for some of the most vulnerable in our society is higher in Northern Ireland than in England & Wales.
Notes to Editors
- Citizens Advice is the largest advice charity in Northern Ireland working against poverty, meeting the information and advice needs of some 260,000 people per year. Money Advice queries are the fastest growing area of enquiry.
- Citizens Advice is currently managing a £1.2m contract from DETI for the provision of debt advice in Northern Ireland, and a contract from the Social Security Agency for benefit take up which is targeted on 25,000 people. The Dealing with Debt service assists clients in financial difficualty. From April 2006 to March 2008, the service assisted close to 4000 people with debts amounting to over £28m.
Case Study 1
A Belfast CAB client who wishes to remain anonymous has been forced to move in with a friend as he can no longer afford to heat his home.
Phoenix informed the client that they would take a maximum of £15 a week at a rate of 70% deduction from all payments made until the £15 is reached.
After negotiations with Citizens Advice, Phoenix Gas agreed to reduce this maximum amount to £10 a week. However, Phoenix Gas still insists on taking 70% of the client’s payment until the £10 is paid each week.
This means that the client has to pay £14.29 each week but only receives £4.29 in gas. When questioned about this, Phoenix Gas confirmed that it is their policy to make deductions at a rate of 70%.
Case Study 2
A client of Lisburn CAB went to the paypoint to pay for gas and discovered that when she paid £10 on to her meter £7 was taken to cover arrears.
Phoenix had been taking £15 a week for arrears which meant the client had to pay £21.42 a week but only received £6.42 for gas.
The client was able to get Phoenix to agree to reduce the payment to £5 a week, however, the deductions continued at a rate of 70% and the client was advised that it can take up to four weeks to send the signal to paypoint and change the amount deducted. This has left the client with little gas and no money.