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Prepayment Meters – A Scourge Penalising the Poor
They are marketed towards the poorest members of society as a way of controlling their bills using a pay as you go meter, but millions of people on low incomes have had them installed only to find that they’re more of a burden than a benefit
It is commonly accepted that almost all prepayment gas and electricity meters are set at the most expensive tariff, but the older types of electricity meters - where customers buy paper tokens to top up their supply - have proven to be the worst of the lot.
Unlike smartcard or key prepayment meters, token meters need to be manually adjusted with each price rise, and until this is done, the consumer has no choice but to continue paying the lower price, only to be charged the excess at a later date.
Although suppliers are responsible for updating the meters - and are often slow at doing so - some still try to recover the debt that has accumulated. The 56 per cent increase in the cost of an average electricity bill since 2003, has meant that, despite careful budgeting, more than a million British Gas (www.britishgas.co.uk),
npower (www.npower.com),
E.ON (www.eonenergy.com) and Scottish Power (www.scottishpower.co.uk) customers have been forced into debt through no fault of their own (CAB, 2006).
This also means that rather than the gradual increase that more affluent customers have faced, the costs for token prepayment users can jump from 2003 prices up to 2007 prices in one go. This often doubles their costs in one fell swoop, pushing some of the most vulnerable members of society into fuel poverty.
Following a campaign by the Citizens Advice Bureau (CAB) and Energywatch, British Gas declared in January that it would no longer apply a debt when it updates meters. The CAB is now appealing to the energy giant to treat customers who already have large bills because of this sympathetically. EDF Energy and Scottish & Southern Energy have followed in the footsteps of British Gas but E.ON, npower and Scottish Power continue with this discriminatory practice.
Some suppliers are also introducing large price drops on special tariffs for their most vulnerable customers - bringing prices into line with those already enjoyed by the vast majority of their customers.
Commenting on an early day motion backed by 156 cross-party MPs to get this practice banned, David Orr, chief executive of the National Housing Federation - which is also lobbying the cause - said: “Too often, the poor pay more for the kind of services most people take for granted. Prepayment meter customers pay over the top even though they settle their bills up-front and rarely switch supplier.”
He added that when prices are eventually updated, energy suppliers “should absorb any additional overheads themselves rather than passing them on to their poorest customers.”
As the issue gains media interest, Ofgem has launched its Consumer First campaign, urging all prepayment customers - who are often the most loyal - to consider the savings they can make by switching supplier. Ofgem estimates that the average prepayment customer can save up to £100, even by staying on a prepayment meter but switching to a different supplier - a figure that goes up to £170 in some areas.
Provided that you have a current account, you should be able to switch to a cheaper, direct debit, non pre-pay tariff. So ring your supplier and ask to be moved to a new account – simply doing this could save you more than £60 a year.
