Struggling to manage their debts as the cost of living rises, many people in lower-income groups are also struggling to cope with another disadvantage – they’re being charged more for their energy. So says a report from energy industry regulator Ofgem, which has ‘given the industry notice to end practices that are failing some customers, and to deliver the full benefits of competition to the entire market’. Specifically, the report points out that people on pre-payment meters (many of whom already have a hard time managing their debt repayments) are being charged more than people who pay for their energy in other ways.

About 12 percent of households, Ofgem reports, pay for at least one fuel by pre-payment meter, but that number jumps to 37 percent for people in social housing. “The lower a household’s income, the higher (in general) their risk of fuel poverty – of having to spend more than 10 percent of their income on fuel,” said a spokesperson for debt management company Gregory Pennington.

“So it’s particularly worrying to see that people on pre-payment meters seem to be getting an even worse deal than before. At the start of 2005, according to the Ofgem report, the ‘average differential between pre-payment meter (PPM) and direct debit (DD) of the six major suppliers’ was around £80. At the start of 2008, however, that had risen to £125.”

“For many of those people, meeting that extra cost is a huge challenge. Today’s economic climate means many people are finding it increasingly difficult to cope – not just because their bills keep rising, but also because their income is looking less secure. Many borrowers, in particular, are already struggling with their debt repayments, and are worried about how they’d manage their debts if their income were to drop.”

There are, however, ways in which borrowers can ’stretch’ their monthly budget. Depending on their circumstances, borrowers may be able to choose from a range of different debt solutions, any of which may be able to reduce the amount they’re paying towards their unsecured debts each month.

Original article by ThinkMoney.com

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