Scottish Power has introduced a £5.2 million hardship fund to help customers in financial difficulty.

Funding will initially be assigned over the next two years, offering financial support to eligible consumers who are in debt on their Scottish Power accounts by clearing or reducing their energy arrears.

The fund will award grants between £100 and £3,000 depending on the size of the debt owed, the individual circumstances of the case, and the budget availability within the fund at the time.

From 2017, the supplier will add unclaimed credits from customers to the fund, once they are two years old.

Unclaimed credits result from a customer moving house without providing new contact details for the final bill, which may have a debt or credit. Such customers may have also neglected to provide a final actual meter reading, which may comprise a debt or credit.

Scottish Power chief executive of retail and generation Neil Clitheroe pointed out that it is not always possible to reunite customers with their unclaimed credits when they switch.

“We think that it makes sense to use this money in a hardship fund to provide assistance for some of our most vulnerable customers in these tough economic times,” he added.

In order to qualify, a customer must be suffering from financial distress and have a debt for energy supplied by Scottish Power.

They have to have made contact with a recognised debt advice agency to understand how to manage their income and expenditure, and show the ability to manage their current financial situation by making regular payments for ongoing usage for at least three full months.

Research by Ernst & Young, published yesterday, found that nearly a third of consumers worry about being able to afford their energy bills more than any other household expense, despite recent energy price cuts.