PRE-PAYMENT
METERS ARE A MATTER OF CONSUMER CHOICE,
SAY ENERGY SUPPLIERS
26th May 2005
The Energy Retail Association (ERA) has
today responded to criticism from the Public
Accounts Committee that Prepayment Meters
(PPMs) are an injustice because vulnerable
people pay higher prices for their energy
through using pre-payment meters and are
not aware that they are paying more.
Customer surveys by suppliers consistently
show that almost 90% of customers have prepayment
meters installed at their own request. Satisfaction
levels are very high, and most customers
feel that having a prepayment meter allows
them to manage their household expenditure
more easily. Around 85% of customers state
that they were happy with this payment method
even though they know it is a more expensive
way of paying than other methods.
The number of homes with pre-payment meters
has remained stable for the past five years
which is an indication that some customers
like this method of payment and would not
choose to change to a credit meter. Pre-payment
meters are particularly popular with students
and people in private rented accommodation.
Duncan Sedgwick, ERA chief executive, said,
“Many customers prefer to use PPMs
as it allows them to budget and they actually
decline offers to fit a credit meter instead.
Where customers ask for a credit meter then
we will provide that, having carried out
responsible credit vetting to best ensure
that customer is not likely to then get
into an unmanageable debt situation.
However, most customers ask to be put on
to prepayment simply because they feel more
confident of managing their money with a
prepayment meter, just as they probably
choose a pay-as-you-go mobile phone rather
than a contract. It is simply a matter of
choice.”
The PAC report claims that the energy market
works against vulnerable consumers because
if they fall into debt suppliers can recover
the debt through a pre-payment meter. They
then have to pay the extra costs of installing
and maintaining the pre-payment meter.
However, the majority of pre-payment customers
are not in debt and those who are repay
their debt at less than £3 a month.
If a customer is repaying a debt on a prepayment
meter they need only pay £2.85 a week
if on benefits or £5 a week otherwise,
though a significant number agree to a higher
repayment rate in order to clear their debt
more quickly. Suppliers agree with the customers
to install a PPM to recover debt where this
is the best option for the customer.
There is no evidence that PPMs exacerbate
fuel poverty. Very few older people use
PPM’s, yet they make up the majority
of people in fuel poverty.
Responding to the reports conclusions, Duncan
Sedgwick said , “Prepayment meters
are more expensive to administer than credit
meters. Suppliers do not recover the full
amount of the additional cost of PPMs. Customers
only pay a third to half of the full cost.
Customers can retain a credit meter provided
they enter into a payment agreement such
as regular payments or direct debit and
keep to it. Customers can request to have
a PPM replaced after a year provided they
do not have a debt on the meter. We only
insist on them having a prepayment meter
if they break such payment arrangements.
This allows customers to repay the debt
at an agreed rate and ensures they continue
to have power in their home.”
Ends
Notes for editors:
The Energy Retail Association established
in October 2003 is the only dedicated trade
association for UK energy suppliers. All
the main energy suppliers operating in the
domestic market in Great Britain are members
of the association. The ERA was set up at
the instigation of the energy supply industry
in order to identify areas where the industry
can work together for the common good without
competitive advantage. As part of its work
the ERA seeks to improve the profile of
the sector and represent the interests of
energy retailers.
The ERA manifesto is available by clicking
here.
Contact: Russell Hamblin-Boone, Head of
Communications & Policy
T: 0207 930 9177
M: 07810 374110 russell.hamblin-boone@energy-retail.org.uk
