Energy giants 'exploiting poor'Pre-pay customers paying hundreds more for power

05 December 2007

A blue flame from a gas hob

Although there is no 'green gas', you can still switch your energy supplier to a green tariff

Energy companies have been accused of exploiting householders on pre-pay meters by forcing them to pay hundreds of pounds a year more for their gas and electricity.

Consumer watchdog Energywatch says people on prepayment meters pay an average of £195 extra each year for their power.

More than 3 million people - usually those on low incomes - pay for their household energy via a prepayment meter.

But Energywatch has condemned the power companies for penalising the poor with ‘discriminatory pricing policies’.

Penalising poor

Energywatch  also slammed the regulator Ofgem for failing to protect the interests of the poorest consumers, many of whom are prohibited by debt from switching payment methods.

Energywatch says prepayment customers are three times more likely to be fuel poor, while in the last year more than 366,000 prepayment meters were installed by companies to recover energy debt.

It says this effectively bars those consumers from switching to cheaper suppliers and payment methods.

Payment methods

Allan Asher, Chief Executive at Energywatch, said: ‘Consumers without internet or banking facilities are excluded from better deals. These figures show that the welcome actions by some suppliers to combat fuel poverty are offset by the extra costs and poorer service inflicted on those forced onto prepayment charges. 

‘Another industry where the poor are exploited through higher rates is the personal credit market where poorer people are forced to pay much higher rates of interest. Energy companies, who are providing essential-for-life services, should take no comfort from such a comparison.’

£195

Prepayment users pay this much extra each year for power

Which? runs its own impartial energy price comparison site - Switch with Which? - where you can check which supplier offers the best deal for your gas and electricity.

Users of Switch with Which? are currently enjoying average savings of £200 each year on their energy bills. The figure comes from those who used the site to switch in the 12 months to July 2007.