Dáil debates

Tuesday, 12 June 2012

Topical Issue Debate

Energy Regulation

5:00 pm

Photo of Aodhán Ó RíordáinAodhán Ó Ríordáin (Dublin North Central, Labour)
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I appreciate the Ceann Comhairle's office affording me the opportunity to raise this issue. I also welcome the Minister, Deputy Rabbitte, to the House to discuss this matter.

I do not normally raise matters concerning constituents on the floor of the House. However, a telephone call which I received last night from a distressed person distressed me so much I felt I had to raise this matter not alone on behalf of the person concerned but on behalf of all persons in Ireland who may be experiencing such financial constraints they cannot pay their bills.

My understanding was that the Minister had reached agreement with service providers that no essential service, be it electricity or gas, would be cut off from a household so long as a payment plan was in place. The person concerned is a working woman and single parent. Her electricity was cut off yesterday by Airtricity and she spent last night in a relative's house. She feels completely humiliated, dehumanised and shamed. That this company believed it had the power to disconnect electricity from her home, which she needs to keep her household going, is shameful. Perhaps the Minister will say if all service providers were party to the agreement reached with him. If not, is it his intention to bring all service providers around the table again to ensure this does not happen again?

I have a few specific questions for the Minister. Have other similar cases come across his desk or been received in his Department? I fear this is not an isolated incident. Also, is the Minister aware that Northern Ireland Electricity has since 1966 operated a zero disconnection policy for domestic customers, except where fraud is identified? Where domestic customers get into serious arrears a meter is installed in the home and a proportion of the money put into it goes towards paying off the arrears. This policy follows direction from the North's utility regulator, which viewed electricity supply as a health and safety issue. Does the Minister believe, as I do, that electricity supply is a health and safety issue? Does the energy regulator have an opinion on competing service providers who offer inducements to customers to switch providers and who then utilise small print to punish them when they find themselves unable to pay? Does the Minister or the energy regulator have an opinion as to the payment options offered to customers, which often restrict the capacity of some customers to pay, which is the situation in the case I have raised today?

I understand that the Minister cannot respond to each individual case raised by a constituent with a Member of this House. I raise this issue not on behalf of the person concerned but on behalf of all people throughout the country who may find themselves in a situation where they are unable to pay a utility bill. I heard today on "Liveline" of a woman who borrowed money from a moneylender and whose life is now fundamentally falling apart because of the pressure being put on her by that moneylender. People make unfortunate decisions when pressure is put on them. Does the Minister share my concern in regard to utility providers cutting off essential services to households and what in his opinion can be done about this in the short and long term?

Photo of Pat RabbittePat Rabbitte (Minister, Department of Communications, Energy and Natural Resources; Dublin South West, Labour)
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I thank Deputy Ó Ríordáin for raising this issue.

The Commission for Energy Regulation, CER, is a statutorily independent body established under the Electricity Regulation Act 1999 and has responsibility for overseeing the regulation of Ireland's electricity and gas sectors. The regulator promotes competition in the electricity and natural gas markets so that customers can ultimately benefit from competitive pressures on prices. The CER also protects the interests of final customers, in particular the disadvantaged and the elderly, by ensuring that standards of services are set and codes of practice are in place to protect customers. In this regard, the CER was of the same mind in respect of my initiative that a protocol be concluded with regard to disconnections. I can confirm to Deputy Ó Ríordáin that while at the outset not all service providers wanted a disconnection protocol, the protocol put in place applies to all suppliers.

I am also well aware that, as stated by the Deputy, some consumers are having trouble meeting their electricity and gas bills owing to challenges facing the economy and the fact that gas and electricity prices are increasing as a result of a significant rise in the price of gas worldwide. As previously stated, I asked the regulator to work with all electricity and gas supply companies to implement initiatives to ensure that disconnection for non-payment of accounts will not take place where customers are experiencing genuine financial hardship and have either entered into a payment plan agreement or have agreed to the installation of a pay-as-you-go meter, as appropriate. I did not know that there is a zero disconnections policy in Northern Ireland. However, following what Deputy Ó Ríordáin has stated I will check it. I understood it applied in Northern Ireland so long as one is party to a payment plan or one has installed a meter.

In November 2010, the regulator introduced a number of initiatives on disconnections policy. These included updating the guidelines for the disconnections code of practice and reducing the cost and allocation of costs of disconnection and reconnection for domestic customers. Now, instead of the customer bearing the entire cost, these costs are shared equally by the supplier. This is an interim measure effective until December 2012.

The regulator is also working with the energy supply industry on interim prepayment solutions and has consulted on the challenges of so-called "debt-hopping" with industry and other interest groups. These groups included the Money Advice and Budgeting Service, MABS, and the Society of St. Vincent de Paul. In October 2011, the regulator introduced debt flagging into the change of suppliers processes. This debt flagging will encourage customers and suppliers to address arrears in an upfront manner and hence prevent the accumulation of further debt and possible disconnection in the future.

The regulator has also proactively facilitated a pay-as-you-go metering system, also known as a prepayment meter, in both the natural gas and electricity industry to allow customers to manage their bills more effectively. The pay-as-you-go metering system is being rolled out by all suppliers throughout the country. In addition to providing a useful budgeting tool to customers, suppliers are required to offer customers facing disconnection the option of a pay-as-you-go meter, where it is suitable, instead of proceeding to disconnect the customer. In these circumstances the customer's outstanding debt is placed on the meter and repaid over time.

In late 2011, the regulator carried out an audit of the guidelines of the code of practice on disconnections to see whether suppliers were in compliance. The audit showed that all suppliers had implemented the guidelines. In the case of all examined domestic customer disconnections, the suppliers had exceed the regulator's requirements in terms of the timing of communication with customers and the numbers of attempts made to engage with customer prior to disconnection.

The regulator will continue to monitor the retail electricity and gas markets, looking specifically at the issues of customer debt and disconnections over the coming months, and from now on will report quarterly on these matters in its electricity and gas retail market reports.

Photo of Aodhán Ó RíordáinAodhán Ó Ríordáin (Dublin North Central, Labour)
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I appreciate the Minister's extensive reply. The case to which I referred is one I hope will not be repeated throughout the country. I am glad the regulator conducted an audit of all service providers late last year and that quarterly reviews take place. It is important to reiterate to anybody in the country under payment pressure that these criteria are in place; this agreement has been reached; it happened because of a Government initiative; some of the companies not involved initially have come on board; and customers have armoury when dealing as individuals with service providers. Companies competing in this market make the switch from one service provider to another seem seamless, profitable and beneficial to customers experiencing serious financial strain. Customers may switch from a more traditional service provider to a new company on the market but before they know it, it appears to be the worst decision they ever made because the new service provider has found a glitch in the terms and conditions, which may have been glossed over by the customer, whereby the company can come down heavy with regard to payment. There is also an issue with regard to the payment plans which companies permit customers to enter.

I congratulate the Minister on his initial initiative. We would not be having this discussion unless the initial initiative had been initiated. I urge the Minister and the Department to be rigorous in this regard. The phone call I received last night was very distressing. I can only assume it is happening throughout the country. I do not trust the companies involved. The fear factor with regard to people having their services disconnected helps the companies to pressurise those in various communities to pay money they may not necessarily have. I make the point that the last thing we need is people accessing money - which they cannot pay back - from moneylenders or loan sharks in their communities who give simple answers. The problems are compounded.

Service providers have a huge responsibility. This is a health and safety issue. If people are legitimately trying to get their house in order, their bills regulated and their situation on a more sound financial footing they should be assisted. They should not be dealing with unscrupulous service companies trying to browbeat them into paying money they do not have.

Photo of Pat RabbittePat Rabbitte (Minister, Department of Communications, Energy and Natural Resources; Dublin South West, Labour)
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I agree with Deputy Ó Ríordáin that this is a distressing case. We were fortunate to have had a milder winter than was the experience in the previous two years. However, the fact of the matter remains that gas prices globally have been on a constantly upward trend. The weakening euro also makes it more expensive because of imports. The weakening euro is probably helpful for many of our exporters selling goods on our neighbouring island but one area where it is certainly not helpful is in terms of the import costs associated with oil and gas.

There has been an increase of approximately 6.7% in the rate of disconnections which, against the background I just painted, is unsurprising. The regulator's assessment is that 30% of these domestic premises are vacant. Nonetheless it is a concern. I sincerely hope that between now and December the uptake of pay-as-you-go meters will continue to rise because it is very important that the protocol is observed on both sides. The no disconnections protocol assumes one is in a payment plan or has installed a pay-as-you-go meter and I recommend this be done. Factors such as the weather seem to motivate people. If we have a very cold winter people realise they ought to have taken these steps, but if it is a relatively mild period there are fewer installations. We also see this with regard to retrofit. I acknowledge the work of organisations such as MABS and the Society of St. Vincent de Paul and I urge them to spread the word about the no disconnections protocol and encourage as many people as possible to sign up.