The energy regulator has announced plans to introduce measures to deal with the problem of 'debt hopping', where some customers who are in debt change their energy supplier to avoid paying their arrears or being cut off.

The Commission for Energy Regulation said it had decided to bring in a 'debt flagging' facility, which would alert energy companies when potential new customers are in arrears with a rival supplier.

The CER said this would enable companies to make a commercial decision about whether to take on a new customer with existing arrears.

The 'flag' would be activated when a domestic electricity or gas customer has owed €250 or more for more than 42 days.

The figure is €750 for small business customers, while the figure for medium-sized firms has yet to be set.

Larger energy users are not included in the scheme. Flags cannot be raised to block gas customers in arrears from changing their electricity supplier or vice versa.

The CER says 'debt hopping' is a serious issue for the energy industry, and raises costs for companies and ultimately for all consumers.

It rejected proposals for a 'debt block' which would allow companies owed money to stop a customer from switching.

Bord Gáis welcomed today's announcement, but called it an 'incomplete solution', adding that it favoured a debt blocking system.

The CER is to work with the industry in the coming months to develop a code of practice on debt flagging, and to ensure that it complies with data protection legislation.

The regulator wants an interim process implemented by 1 October this year, with a full automated debt flagging system in place by 1 January 2013.