Are you on a prepayment meter ???

[ICY]

This has just been announced by Ogfem

Pre payment meter customers ARE being ripped off

We already knew it was the case but now Ofgem have just made the following announcment:


Four million households spend more than 10% of their income on fuel

Pre-payment energy meter customers are missing out on average savings of £100 a year by not switching supplier, the regulator Ofgem has said.

This is a much bigger saving than direct debit customers could save by switching, the regulator added.
Consumer groups have long criticised the pre-payment energy market as being expensive, with suppliers making it difficult to switch.
Generally, pre-payment customers tend to be on low incomes.
Therefore, pre-payment customers should look to make savings by switching supplier if they already have not done so, Ofgem stressed.
"Pre-payment customers should take advantage of the competitive market if they are to see further falls in their energy bills," Alistair Buchanan, Ofgem chief executive, said.
"By changing supplier they can save on average around £100. But in some regions this can be as great as £170 per year," he added.
In the UK, four million households spend more than 10% of their income on energy and are therefore defined as fuel poor. Many of these households use pre-payment meters.

[2Grumpy]

When you consider that the energy company gets money in advance for pre-paymant meters I would (naively) have expected prices to be lower than those where people are paying on receipt of an invoice. I wonder if they can justify their charges, rather than just charging as much as they think that they can get away with.
I could understand having to pay more when the meter reader came round to empty the meter but not with current technology.
I wonder if there's any way that pressure could be put on the energy companies to be fair to the people on pre-payment, especially when they tend to be the poorest people - or are they fair game to subsidise the better off?

[MollieUK]

I have a great one from Powergen. I am behind with my gas and agreed to a prepayment meter. The National Grid man came as arranged and the meter is so big it would not fit into the space between the pipes.

So I phoned Powergen and told them the story and was told in no uncertain terms that it was my fault the meter wouldn't fit and I have to pay off my debt in full!!!!!!

I have contacted Enery Watch because they are now going for disconnection without ever offering me any other option to pay. I was gobsmacked at this as I pointed out that I didn't build the house, that I didn't install the gas equipment, they did but he wouldn't have that and it was my fault!!

Beggars belief!

[Rich44]

That sucks, Powergen are the biggest bunch of scumbags going from my personal experiences of them

[gondukin]

Originally Posted by 2Grumpy

When you consider that the energy company gets money in advance for pre-paymant meters I would (naively) have expected prices to be lower than those where people are paying on receipt of an invoice. I wonder if they can justify their charges, rather than just charging as much as they think that they can get away with.
I could understand having to pay more when the meter reader came round to empty the meter but not with current technology.
I wonder if there's any way that pressure could be put on the energy companies to be fair to the people on pre-payment, especially when they tend to be the poorest people - or are they fair game to subsidise the better off?

They are more expensive for a reason - they cost more to run. The equipment is more complex therefore much more expensive and also far more likely to break down (higher maintenance costs). People also lose/damage their cards over time (cost of replacements, callcentre staff to take the call and issue them and even engineers to come out and give extra emergency credit), and each time the card is used the shop will take a transaction fee.

To my knowledge only Ebico actually charge everyone the same, but they acknowledge people who use prepayment meters are less profitable - here is a quote from their site...

OK, let's give you an example with simple numbers so you can see how it works. All supply companies characterise their customers by how expensive they are to look after (the customers’ ‘cost to serve’). Let's say we have 100 customers. Of these, 20 are customers using prepayment meters who each cost £80 to serve. Eighty are customers who cost £20 each year to look after. The total cost of servicing all these customers in the year is:

20 x £80 = £1600
plus 80 x £20 = £1600
Total £3200
In this example, what we do is charge everyone the average ‘cost to serve’ which, in this case, is:
£3200 / 100 = £32
Thus, the low cost to serve customers in this example pay £12 per year more than they would do otherwise, but the pre payment meter customers pay £48 per year less.
Direct debit customers end up paying more with EQUIGAS and EQUIPOWER, but not to an especially significant degree. Pre payment meter customers end up paying less with EQUIGAS and EQUIPOWER and by an amount which is significant for those on modest levels of household income. And there you have it.

Of course, the model only works as long as direct debit customers use them, if they only had prepayment customers then the prices would be higher.

[Rich44]

its a shame then that if its so unprofitable for these companies that they effectively force some people into having them

[gondukin]

Originally Posted by Rich44

its a shame then that if its so unprofitable for these companies that they effectively force some people into having them

It's not unprofitable - that's why they charge higher prices. They wouldn't want their margins to be hurt now would they?