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Vulnerable Energy Customers Overpaying by £250m

energy-meter-prices

Some of the poorest households in the UK are paying £250 million more than they should on their energy bills, according to energy supplier Bulb.

Under rules laid out by the Competition and Markets Authority, customers with prepayment meters shouldn’t be charged over £63 a year more than those with standard meters. However, new research from challenger supplier Bulb suggests that three of the UK’s Big Six energy companies – British Gas, npower and E.ON – are charging prepayment customers far more than the rules allow.

According to the renewable energy supplier, around 760,000 British Gas customers on a prepayment meter are paying £222 more on their energy bills each year than they need to. The firm also said that 320,000 npower prepayment customers are paying £160 more than they need, while E.ON prepayment customers are paying £51 a year more than they should be. The other energy suppliers that make up the Big Six – EDF, Scottish Power and SSE – were all found to be charging prepayment customers within the rules’ limits.  

Customers with prepayment meters are required to ‘top up’ their meters with a key, token or via an app, before they can use any gas or electricity. If the meters are not topped up, the energy supply could be cut off to the home. These types of energy meter are typically used by poorer and more vulnerable households, such as those who have had problems paying off energy debt in the past or those living in rented accommodation. But energy suppliers typically charge more for customers to use prepayment meters than traditional ones as they cost more to run.

In 2016, the CMA set out rules that ensured energy suppliers should charge prepayment customers no more than £63 more a year than customers with traditional meters. However, the cheapest prepayment tariff for a British Gas customer with average energy usage was £1,241.58 a year, while the firm’s cheapest tariff for traditional meters is £285.46 cheaper at £965.12 a year. The cheapest prepayment tariff offered by npower is £1,241.88 a year for the average home, £222.85 higher than its cheapest standard tariff which costs £1,019.03. And E.ON’s cheapest prepayment tariff is £1,241.88 a year, £113.93 more expensive than its cheapest energy deal on a standard tariff, which is £1,127.95

“There’s no good reason why these suppliers are charging prepay customers so much more for their energy,” said Hayden Wood, co-founder and chief executive of Bulb. “We’d like to see all suppliers offer a fair tariff that reflects the true cost of energy.”

Earlier this month, a report from the consumer group Citizens Advice urged the UK energy regulator Ofgem to do more to protect the most vulnerable customers. The report found that vulnerable customers – those struggling with disabilities or long-term health conditions – were more likely to be in debt to their energy supplier, with 48% of those seeking help with their debt in 2018 being classed as vulnerable.

Fergus Cole
Fergus Cole

Fergus is a journalist specialising in the personal finance, energy and broadband sectors. He also has a passion for travel and adventure so tries to make the most of this in any spare time he gets.

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