“Cancelling direct debits is not a great idea”

Economics expert has told ELN that the move could lead to expensive prepayment meters

Big Zero Report 2022

As experts warn customers must be prepared for a “perfect storm” of rising energy bills and higher cost of living this winter, thousands of Britons are contemplating an energy strike on 1st October.

As of Thursday 1st September, more than 132,000 people have signed up to the ‘Don’t Pay’ campaign.

Risking credit scores, bailiffs and disconnection, billpayers have pledged to strike on 1st October, when the new energy price cap will come into force.

Speaking to ELN, Jacopo Torriti, Professor of Energy Economics and Policy at the University of Reading, said the decision to cancel direct debit energy payments was “not a great idea”.

Professor Torriti said: “Under current rules, cancelling direct debits is not a great idea. It can lead to expensive prepayment meters, damage consumers’ credit record and take consumers out of any existing payment plan.”

Although the government has yet to decide on a new package to support people before the price cap is raised to more than £3,500 a year on 1st October, experts and energy companies have already called for a freeze of energy bills for two years.

But is there still enough time for the government to freeze the announced energy price cap?

Professor Torriti commented: “The plan to freeze energy bills for two years would certainly bring benefits to households. The plan is backed by several energy retailers as a deficit fund would guarantee they are covered for the difference between the current price cap and future wholesale prices.

“However, without mechanisms for capping wholesale prices the overall deficit might be very high. Good for consumers, good for suppliers not good for government.”

Last month, former Prime Minister Gordon Brown said energy companies unable to offer to their customers lower bills should be temporarily renationalised.

Campaigners have already put up a petition to nationalise energy companies.

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