Below is a letter FPA sent to Business, Energy and Industrial Strategy Minister Claire Perry in July. Your can read her reply here. Please send in your stories and help us press these points home.
Open letter to Minister Claire Perry re enforcement of regulations 21 July 2017
Ruth explains why the prepayment meter price cap is insufficient
Ofgem’s Prepayment Price Cap Briefing Tuesday February 7th at 9.30am-10.30am
On Tuesday February 7th
Ofgem announced the levels of pre-payment price cap which come into force on April 1st
. The transitional price cap is being introduced following the Competition and Market Authority’s (CMA’S) two year investigation of the energy market. It will bring into effect the outrageous decision of the CMA to cap the extra toll on Prepayment customers by only around £75 a year – despite these customers, usually the worst-off, paying around £300 extra for the privilege of paying in advance.
Following the announcement, Fuel Poverty Action attended a briefing for stakeholders
at Ofgem’s London office at 9 Millbank at 9:30am. FPA presented detailed evidence and devastating personal testimonies to the CMA last November[i]along with a tiny doll’s cap[ii] but they preferred to listen to the industry, which is now increasing prices yet again.
The energy companies’ licence conditions (SLC 27.2A)[iii] says any extra charge shall reflect real costs – yet real costs of prepayment meters were calculated by the CMA at £54, raised under pressure from the industry to £63. The extra paid by prepayment meter consumers is around £300, and decreasing it by £75 will not bring it down to £63. Suppliers will still take in an extra £160 profit per year from each prepayment customer. The licensing conditions are not being met.
The CMA’s Roger Witcomb says, “It is unacceptable that four million households on prepayment meters, many of them vulnerable, face higher bills than other energy customers”
. [iv] Yet this is exactly what he has ordered.
Ruth London, from FPA says, “Thousands of people die every year because they cannot afford to heat their homes, and millions live in fear of the heating, lights, and fridge clicking off when a meter runs out. The CMA seem to be more concerned to promote competition than they are about people dying – and then they expect us to be grateful. Of course, every penny does count, but the reality is bitter for customers who cannot afford this blatant discrimination against those who have least to begin with.”
“When we wrote to the Prime Minister about this in November, the reply put forward switching and competition as a solution. It is now perfectly obvious that competition does not work to protect customers in the energy market, even for credit meter customers and still less here. The Prime Minister’s outraged words about an exploitative market and her autumn promises to take action on fuel bills that are “just not right” have so far led to nothing but more pain. This pathetic cap is no exception.“
[ii] Photos here: https://drive.google.com/drive/folders/0B0qHcBpAhFaCVUQtcWwxS0RiYkk?usp=sharing
[iii] See Suppliers’ conditions at https://www.ofgem.gov.uk/licences-codes-and-standards/licences/licence-conditions
In August FPA submitted a response to the government’s consultation on how to allocate funding for District Heating projects. District Heating, where customers get heat from a central source – which can be fossil fuel, waste heat, or renewable – is being rolled out nationally. It has great potential to save on carbon emissions, and also bring down bills, but it is often being installed and run in a way that is actually bad for both the climate and its customers, who are locked into long term contracts with no regulation and no way to switch.
Our response to the consultation is based on the experience of Myatts Field North estate in South London. Following its submission, FPA and representatives from Myatts Field were invited to meet the heat networks team at the Department of Business, Energy, and Industrial Strategy (BEIS). They seemed to take seriously our concern that if not run properly district heating could become as toxic as fracking, and that problems on existing heat networks need to be dealt with. You can download our submission here
If you have experience of District Heating (or a “Heat Network”), good or bad, FPA would be glad to hear from you.