With energy prices soaring and millions of households struggling to pay their fuel bills, now hardly seems the ideal time to be dispensing with the services of the industry watchdog. But that is precisely what the Government is doing. From the end of next month Energywatch, which has campaigned on behalf of consumers for seven years, is being wound down and merged into the National Consumer Council (NCC).

Consumer Focus, part of the new-style NCC, will assist with energy complaints only where customers are deemed to be vulnerable. The vast majority of people will have to take on the energy companies without any expert help.

Given the track record of the energy companies, there will probably be no shortage of grievances to take up. In 2001 Energywatch had to deal with thousands of mis-selling complaints, including aggressive doorstep sales tactics. Meanwhile, complaints about billing have continued to flood in, with consumers angry at being sent bills that are late, inaccurate and unclear.

Times Money recently uncovered flaws in npower's billing system, which may have led to millions of the company's customers being overcharged. As a result, Energywatch has referred the problem to Ofgem, the energy regulator.

There are also concerns over the effectiveness of the Energy Ombudsman, now the final arbiter in energy complaints. Critics have compared the ombudsman's performance unfavourably with that of Energywatch, the body that it will effectively be replacing.

In the year to February the ombudsman was unable to help 95 per cent of consumers who asked for complaints to be investigated. It took up 2,469 complaints of the 45,000 referred to it and made compensation awards in 1,498 cases. The average award was £93.80, making a total compensation figure of £140,512.

By contrast, in the 12 months to March 31 Energywatch dealt with more than 200,000 inquiries, investigated 26,895 complaints from domestic consumers and achieved compensation of £6.3 million, with an average award of £170. An Energywatch spokesman says: “It ought to be a matter of concern that the body that will be carrying out some of the key tasks previously handled by Energywatch appears to be less effective in securing compensation for energy customers.”

But a spokesman for the ombudsman said that it was unfair to compare its performance with Energywatch because the two organisations were carrying out different tasks.

The spokesman said: “We cannot hold the customer's hand through the process as Energywatch can. We have to wait until the customer has first exhausted an energy company's own complaints procedure. Secondly, we calculate compensation awarded to consumers in a different way from Energywatch.”

However, commentators remain sceptical that the new system will improve the situation for energy consumers. Gordon Lishman, the director-general of Age Concern, says: “Consumer Focus simply won't replace the services that Energywatch currently provides.

“Whereas Energywatch deals with any complaint referred to it, Consumer Focus is required to deal only with complaints about imminent disconnections. We are worried that this will have a knock-on effect for local information and advice services, such as Age Concern, many of which are already experiencing both rising demand from pensioners with financial worries and problems with obtaining funding for service provision. This is very worrying at a time when energy price rises are having a significant impact on older people and other vulnerable groups.”

Navin Waghe, a specialist in regulation at LECG, the economic and financial consultancy, says: “In the future consumers will not have the voice that they had when they benefited from a watchdog that was devoted exclusively to concerns about energy.

“What's more, if the remit of the new body taking over from Energywatch can deal only with consumers who are regarded as vulnerable, then it will be of no use to Mr and Mrs Average. This is of particular concern when rising energy prices mean that more and more people are going to be struggling with their energy bills and might need the help of a body like Energywatch.”

A spokesman for Consumer Focus says: “The organisation will be more of a campaigning body and is not primarily going to be there to help consumers with their complaints.

“It will be able to offer some help with complaints, but this is going to be limited to those customers who are deemed to be vulnerable, either because of their personal circumstances or because they have been disconnected or threatened with disconnection.

“We expect that we will receive about 15,000 to 20,000 calls a year relating to energy complaints, which is a lot fewer than Energywatch currently receives. The Government is putting a much greater focus on energy companies resolving complaints themselves through a much tighter procedure.”

A spokesman for the Department for Business, which oversaw the changes to the current system, adds: “The new standards for complaints handling that are being introduced on October 1 will require much more detailed and transparent record-keeping.

“On the same date, the ombudsman scheme will become compulsory rather than voluntary, as at present, so it will have much sharper teeth.”

Case study: Essential service

Trevor Hill, of Cheltenham, was horrified to learn that Energywatch will be disappearing in its present form at the end of next month.

The 83-year-old retired BBC executive, left, says: “I cannot believe that the Government would be so foolish as to disband an organisation that has given so much help to so many people.

“Energywatch was tremendously helpful to me when I got into a dispute with three different energy companies over my fuel bills. I ended up being chased for money by British Gas, E.ON and npower. At one point I had bailiffs turn up at my door demanding money that I did not owe.

“Fortunately, Energywatch staff have devoted a lot of time and effort into fighting my case and I am now in the process of claiming back money from the three energy companies, as well as compensation for all the distress and inconvenience they have caused me.

“I really appreciate having Energywatch fighting my corner. I cannot imagine what I would have done without it.”