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Prepayment meter customers deserve better

22 July 2010

I was astonished to find after starting at Consumer Focus that nearly nine million people live in homes using prepayment meters. Being new to the field, I thought that such meters were a thing of the past. In fact, they seem to be more a thing of the future, with around 2,000 meters installed every working day last year and many users preferring them to standard meters because they enable customers to control their finances, although it does mean they pay more for their energy. If consumers want prepayment meters, it is not for us to stand in their way, but we are concerned at the quality of the service they get - we think it should be better.
Many, usually wealthier, consumers have seen real benefits from innovations such as paperless billing and online account management, but prepay customers have seen fewer benefits. Our invitation to industry is to improve its offer to prepayment meter customers.
Our in-depth report Cutting Back, Cutting Down, Cutting Off has shown that about 1.4 million people - one in six prepay customers - self-disconnected their energy supply last year. No-one should live in fear of their energy cutting out. All consumers deserve to live in greater dignity, and we cannot turn a blind eye to this huge hidden problem.
Worryingly, it is the most vulnerable who are hit hardest by self-disconnection. Half of those households who have cut off their energy are home to someone with an illness or disability and two in five are home to children under 16. Furthermore, almost half of people who cut themselves off say it happens more in winter, when people most need to keep themselves warm.
Some consumers cut off their energy frequently or for long periods of time because they have not got enough money. To counter this we want to see an extension of discounted tariffs and greater investment in making the homes of the most vulnerable more energy efficient. However, many others are cut off because of the difficulty or inconvenience of topping up, which energy companies can help to prevent.
The experience of prepayment meters needs to be brought into the 21st century. In the digital age, consumers have a range of options to top up their mobile phones or travel cards, so it is hard to understand why with gas and electricity such an essential service it is still so difficult to top up. To make it easier for people to buy extra credit online, ATM and text message top-up facilities should be introduced, as well as a prepayment facility in smart meters. We also want better checks for vulnerable consumers before meters are installed, and improved guarantees on emergency credit.
The introduction of smart meters is a major opportunity to help redress the balance for prepayment customers. Including a prepayment facility in all smart meters would not only make it easier for people to top up at home, it would also remove part of the cost differential for prepayment customers for good - cutting a slice off their bills permanently.
Suppliers also have a key role in helping the poorest families to reduce their bills and stop their homes leaking heat. With energy efficiency measures from the Carbon Emissions Reduction Target scheme still failing adequately to target the poorest homes, and discounted energy tariffs reaching only a fraction of the poorest households, there is clearly scope for energy firms to raise their game.
We want to use our new report to invite suppliers to sit down at the table with us to have an open and honest dialogue. Suppliers have shown their willingness to help tackle fuel poverty and their ability to innovate in other areas, and we recognise that not all of the help needed to tackle prepayment customers' problems are within suppliers' ability to provide.
However the knock-on effects for consumers of self-disconnection show that the industry hasn't focused enough to date on how to make the experience of prepayment customers efficient, convenient and dignified. This is the task we now set for ourselves - and suppliers - to achieve.
Mike O'Connor CBE, chief executive, Consumer Focus
Source: Disconnector

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