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Fuel Poverty

I have written in my notes that there could be some drawbacks to such a scheme. I recognise that, but it would certainly be worth while to carry out research into the feasibility of a link between price increases and payments being made by the energy companies bringing them about. The second matter on which I wish to make some suggestions is payment methods for domestic energy consumers. It is often said that the energy market in the UK is among the most competitive in the world, which is almost certainly the case. Unfortunately, those on low incomes often do not seem to receive many benefits from such competition. In fact, many low-income customers pay more for their energy supplies than other consumers. That can arise because they do not have access or the ability to commit themselves to direct debit payments, or because they prefer, or are forced, to use prepayment meters. The gap between the energy prices paid by direct debit customers and those paying by prepayment methods, cash or cheque, has increased significantly in the past few years. Energywatch released figures last month showing that prepayment meter customers were paying an average of £195 a year more than customers who could access cheaper online tariffs. In the most extreme cases, consumers found themselves paying as much as £304 extra each year. Prepayment meter users are also three times more likely to be fuel poor, and last year alone 366,000 prepayment meters were installed by companies to recover energy debt, thus effectively barring consumers from switching to cheaper suppliers and payment methods. It is vital that Ofgem and the Government address the gap between the prices paid by direct debit customers and those paid by customers using prepayment methods. It is not enough for the regulator to suggest that a solution for prepayment meter users is to switch supplier to take advantage of cheaper deals, because many are prevented from doing so as they are locked into a debt to their supplier. We must move away from the situation that the poorer someone is, the more they pay for their energy.