Pre-pay energy users charged £255 extraEnergywatch slams firms over cost to OAPs and poor

06 March 2008

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 firms are charging pre-pay meter users an average of £255 a year more than online customers, it was revealed today.

The higher cost of pre-payment meters for gas and electricity is penalising the poorer households and pensioners who typically use them, according to Energywatch.

The industry watchdog is calling on companies to stop charging punitive rates.

Profits

Energy firms are making a £400 million profit from the pricing system, according to Energywatch figures.

£400 million

Energywatch says this is profit resulting from pricing system

And one in three households in fuel poverty - where more than 10% of income is spent on heating - has a pre-payment meter.

Graham Kerr of Energywatch said: 'We have hard evidence of £400 million of excess profits being taken off the poorest members of society just at a time when fuel poverty is continuing to rise.

'Instead of taking from the rich to give to the poor, it seems that energy companies are taking from the poor to give to the rich.'

Ofgem probe

It comes as Ofgem continues to investigate the UK's gas and electricity markets in the wake of a series of price hikes.

The inquiry, which was launched last month, is being carried out under Ofgem's Enterprise Act powers, with its initial findings due to be published before the end of September.

Energywatch said it wanted Ofgem to use its investigation to set out how the industry would stop using pre-payment meter tariffs to exploit the poorest.

Price hikes

In January British Gas announced average price increases of 15% for its customers, with regional variations for the increases to its electricity tariffs.

Rival energy firm Eon revealed increases of 9.7% for electricity and 15% for gas last month.

That followed price hikes from Npower of 17.2% for gas and 12.7% for electricity.

EDF and Scottish Power

EDF increased its gas prices by 12.9% and electricity by 7.9%.

And Scottish Power pushed up electricity prices by an average of 14%, with gas prices up by 15%.

The last of the big six suppliers - Scottish and Southern Energy - has said it will hold its prices until the end of March at least.

According to today's Times, Chancellor Alistair Darling is ready to deliver an ultimatum to the major energy companies to tackle the inequality in his Budget next week.

The Treasury would not comment last night on what it described as 'Budget speculation'.

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