PRESS RELEASE: Fuel poverty campaigners ridicule little CMA cap on prepayment meter tariffs

11th November 2016

A dozen campaigners today delivered a response to the Competition and Market Authority’s proposals to cap the extra cost paid for energy by users of prepayment meters. They came from Fuel Poverty Action, National Right to Fuel Campaign, Unison, and the All African Women’s Group, and included pensioners, teachers, and asylum seekers. They wielded placards proclaiming “Your cap doesn’t fit”, “Higher Tariffs = Discrimination” and “Cold Homes Kill”.i

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Prepayment meter users pay on average £300 more than customers on direct debit. The CMA propose to decrease this difference by just £75. In their response, Fuel Poverty Action demanded parity, a position which has been endorsed by a series of other organisations.ii FPA handed in the response in the lobby of Victoria House, in a tiny doll’s cap, to highlight the insult of the CMA’s insufficient proposal.

Passing on the cap containing a scroll with the response, Ruth London of FPA told Project Director Erika Lewis, “Energy companies’ license conditions forbid discrimination against users of PPMs, the CMA’s own Roger Witcombe has declared, It is unacceptable that 4 million households on prepayment meters, many of them vulnerable, face higher bills than other energy customers,’ and yet the CMA’s proposals will perpetuate this injustice.” Erika Lewis, for the CMA, agreed that the proposals are not set in stone and promised that they would take seriously the evidence provided.

Given the rife exploitation of customers by the energy industry, Business, Energy and Industrial Strategy secretary Greg Clark has promised to “deal with this problem”. Fuel Poverty Action are therefore today sending a letter to both Greg Clark and Theresa May to ask whether they genuinely intend to challenge an industry that has had a free pass for so long, or will they bring in measures like the CMA’s cap, that sound good on paper, but in practice leave us in the cold.

Case Study

As well as costing more, PPMs are often forced on people, sometimes by break-ins to their homes. One such case is that of Josh Hull of Windsor who came home to find his front door lock broken – hea thought he had been burgled. He then found his payments debited for a previous tenant’s debt – a common problem – and is unable to use his electricity. Aside from the cost, he says the anxiety and sleepless nights are draining, and have harmed his performance in a new job. He is ready to speak to the media.

[i] Pictures available here: https://drive.google.com/drive/folders/0B0qHcBpAhFaCVUQtcWwxS0RiYkk?usp=sharing

[ii] See our response on our website for the full list of endorsements: https://www.fuelpovertyaction.org.uk/campaigns/no-minor-cap-on-prepayment-meters-parity-now/

Email: [email protected]

Website: fuelpovertyaction.org.uk

Phone: 07751 748 026

Twitter: @fuelpovaction

Prepayment justice – Callout for testimonials and support!

At the moment, we are trying to intervene to affect the level of the “cap” being proposed on prepayment meter tariffs.
It’s good that the CMA (Competition and Markets Authority) is proposing a cap at all, but completely unjust that they still want people on prepayment meters – who are usually the worst off customers, and often in debt – to pay hundreds of pounds more for their fuel than people who pay their bills by direct debit. We have written a response to the CMA which we will deliver to them at their offices in London at 10.30 this Friday. We would love for you to join us – just meet outside Unite in Holborn at 10.30am!
We will be including, anonymously, some of the testimonies from the Speak Out web page. We’ve also just launched an online petition demanding that the Department for Business, Energy and Industrial Strategy force parity for prepayment meter customers against those on direct debit. If you would like to help with any of this, please let us know.
The biggest help would be if you would like to speak out about your own situation – in your own name or anonymously, in the media around the 11th November action, or later through our own multi-media “speak out” platform that one of our members is creating. Email us at [email protected] with ‘Testimonial’ in the subject line if you can help.
Let’s fight the penalisation of poverty by prepayment meters!
In solidarity, FPA.

No minor cap on prepayment meters – parity now!

The Competition and Markets Authority, at the end of two years of considering the shameful state of the UK energy market, have decided on the very partial remedy of capping the difference in tariff between people on prepayment meters and those paying for their energy by direct debit. But this isn’t enough and never will be, we demand equality for those on prepayment meters! Below is our response to the CMA’s subsequent consultation (or click here for the document).
We would like to invite other organisations concerned about fuel poverty, prepayment meters or energy equality to endorse our response to the CMA. If you would like to do so, please email us  before Friday 11th November with your name, the name of your organisation, and your position or authority to sign. Put “Endorsement” in the subject line. We will add the organisation below and include a list when we hand this in on Friday.
Endorsements
Plymouth Energy Community
SELCE (South East London Community Energy)
Lambeth Green Party
Barnet Green Party
Switched On London
Single Mothers’ Self-Defence
WinVisible (Women with visible and invisible disabilities)
Women of Colour in the Global Women’s Strike
English Collective of Prostitutes
All African Women’s Group
UNISON
Payday men’s network
DPAC (Disabled People Against Cuts)
Lambeth Asian Centre
Greater London Pensioners Association
Reclaim the Power
National Right to Fuel Campaign
 

Response to Competition and Markets Authority

proposals for a cap on Prepayment Meter tariffs

We are responding to your announcement on 11 October 2016 that you intend to impose a cap on prices charged to customers using prepayment meters (PPMs) for their energy, which will reduce the energy costs by around £75 per year. You say, “It is unacceptable that four million households on prepayment meters, many of them vulnerable, face higher bills than other energy customers”.i Yet the cap you propose would leave PPM customers still paying much more for their power. We believe this proposal is discriminatory, unjust and unjustifiable. The higher charges imposed on PPM customers act as a tax on poverty. Instead, prepayment customers should be offered parity with customers paying by direct debit, and should be compensated for their many years of paying extortionate prices, during which many people have gone cold, and many have gone hungry in order to keep the meter fed.

Our reasons are these:

1. You found that the cheapest tariffs for prepayment meter users are £260 – £320 a year more than for direct debit customers, averaged out, in your March report, at £300 per year per customer. A cap reducing this by £75 is unacceptable. Even if, as you claim, PPMs cost more to administer, your proposal would still allow suppliers to take in an extra £160 profit per year from each PPM customer.

2. Prepayment meter users are usually the worst off customers, financially. By your own report, they are most likely to “have low income; have low or no qualifications; have a disability; and live in social housing.”ii It is regressive, unjust, and dangerous to health to make the people who have the least resources pay the highest prices for their energy.

3. Fuel Poverty Action is constantly being contacted by people who are being pushed onto a prepayment meter against their will, or who already have one and are in despair over the high cost of their energy, the high rate of debt repayment, or the difficulty of accessing a meter or a payment point. The hard realities of their dealings with the energy suppliers make a mockery of the protections that are officially in place to protect people who are vulnerable financially and in other ways. Your deliberations should not be based on what is supposed to happen but on what happens in practice. The high price paid for energy through prepayment meters is even worse in the context of brutality, illegality, high standing charges and debt repayment rates. Please see brief personal testimonies, attached.

4. Prepayment meters are often forced on customers because of arrears, or the fear of them. At one end of the scale are people who choose a PPM “to help them budget” because cash is so short that they cannot afford to risk using energy according to their needs. At the other extreme are people whose homes are broken into to impose a PPM after they go into arrears – a violent and traumatic experience for people whose lives are already difficult. In between are the millions who move into a rented home where they have no choice, or who are pressurised onto a PPM because the energy company fails to properly explore all other options for paying off a debt.

5. It is counter to natural justice that people in arrears should be forced onto a system of payment which is more expensive.

4. Prepayment meters are not supposed to be installed unless it is “safe and reasonably practicable” for the customer to use them, and to top up their key or card. The necessary checks are often ignored, magistrates do not study cases closely, and the meters are often imposed on people for whom they are dangerous, because they are not physically able to top up, or because they are in danger when the power goes off.

5. The higher rate of exploitation of PPM customers acts as a perverse incentive to suppliers to push customers onto this means of dealing with arrears, instead of exploring ways to help their customers and treating a PPM as they are supposed to – as a last resort.

6. Vulnerable customers are protected from having their power disconnected, at least in the winter and in many cases all year round. Yet PPM users are in effect disconnected all the time. When they cannot afford to top up, or are unable to get to a payment point, the power clicks off and they end up cold, in the dark, without refrigeration for food or medicines, and unable to charge their phones.

7. Getting to a payment point can be a real problem for some customers, and is time consuming and extra work for all. It can also be expensive, especially in rural areas.

8. In addition to the extra premium on their payments, many PPM customers have to pay warrant costs for installation, some still have to pay other installation costs, and they are more likely than other customers to have repayment rates for arrears they have run up on credit meters set at a level that they cannot afford.

9. You calculate the extra cost to companies of administering PPMs, mostly caused by administering the payment points in shops, at £63. We note that you originally calculated the difference at £54, but raised it under pressure from the Big Six energy companies. iii

10. The arguments advanced by suppliers are highly revealing; you yourselves admit that they are “not robust.” For instance, the inclusion of bad debt as an extra cost of PPMs when the debt was necessarily incurred before, not while using the meter, or counting emergency credit as “bad debt”. One company said cost differential was higher because PPM users more likely to be disabled or single mothers so more likely to be on the Priority Services Register for vulnerable customers (PSR)! The idea that vulnerability is a reason for higher charges should set alarm bells ringing. So should the use of fatuous arguments to justify higher prices. This is a clear sign that customers are being ripped off — in defiance of clear regulations stipulating that there must be no price discrimination according to method of payment.

11. There appears to be little weight given to the fact that PPM users’ payments are made up front. Like Direct Debit payments, they never require chasing. There is no need for meter readings and no need for bills, and in addition, the cash is advanced to the supplier before the power is used.

12. The technical arguments you advance as a reason for your very little cap, a cap which only slightly dents the poverty premium, will not make sense to the millions of PPM customers, nor to anyone concerned with ending this injustice. You talk about “perverse incentives” if the cap were to be set too low, and the need for headroom to allow suppliers to compete beneath the level of the cap while still earning a normal rate of return”. iv This appears to promote a hope that in practice companies will price lower than the cap, to be competitive. But you must know this is unlikely to happen. For years you have attempted to make competition work in the energy market (doorstep selling / no doorstep selling / doorstep selling again; multiple tariffs / a few simple tariffs / multiple tariffs again). In the domestic energy market, competition does not work. And for PPM customers in particular, it cannot work: it is difficult and often impossible for these customers to switch supplier. What is needed is a publicly owned and accountable energy industry, and failing that, stringent Government regulation to prevent profiteering at the expense of people’s lives. This could begin with a cap that brings PPM users into parity with their better off neighbours who can pay their bills by Direct Debit.

13. You calculate that in 2014 suppliers made £2 billion more profits than they would have if the market were working as it should.v That winter 15,000 people are estimated to have died because they could not afford to heat their homes.1 vi This is not acceptable to the public.

Fuel Poverty Action 11 November 2016

1

i Roger Witcomb, chair of the energy market investigation, https://www.gov.uk/government/news/next-step-towards-300m-saving-for-prepayment-energy-customers 11 October 2016

ii https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/531204/overview-modernising-the-energy-market.pdf para 18

iv https://assets.publishing.service.gov.uk/media/576c23e4ed915d622c000087/Energy-final-report-summary.pdf para 248

v https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/531204/overview-modernising-the-energy-market.pdf

vi Excess winter deaths in 2014 – 15 estimated to have been caused by cold homes numbered 15,000 in the UK.

Our letter to British Gas CEO Iain Conn demanding compensation for customers

Dear Iain Conn,

We are writing to ask for compensation, on behalf of the thousands of British Gas customers who have suffered from British Gas extortion and bullying. Complaints include:

  • forced imposition of prepayment key or card meters even against Ofgem rules
  • price discrimination against prepayment meter customers
  • all customers being charged what the Competition and Marketing Authority called “excessive prices”
  • persistent pressure on users of gas and electricity for money that they do not owe.

Meanwhile, you have pocketed £3 million last year, profits have risen by nearly 1/3i – and 15,000 people have died because they could not afford heating.ii

Continue reading “Our letter to British Gas CEO Iain Conn demanding compensation for customers”

Lambeth Library Warm Up – Full Film!

On Saturday 19th March 2016, Fuel Poverty Action came together with local residents from Myatt’s Field South, and pensioners from Lambeth’s Pensioners Action Group and Older People’s Alliance to stage a Warm Up in Lambeth library, threatened with closure, to demonstrate how vital a public resource it is, especially for people living in fuel poverty. Warm homes for all!
Huge thanks to John Lubbock for coming and filming the action. Watch the film and check him out on Twitter!

Social landlords lock tenants into energy companies and fuel poverty

Fuel Poverty Action has been contacted by a number of tenants from social housing estates across London who told us that they are unable to switch their energy suppliers for heating and hot water  because their social landlord has ‘locked’ them in to buying from one supplier. In one case, residents of Myatts Field North estate have been locked in to buying their heating and hot water from e.on for 40 years under a Private Finance Initiative contract agreed by Lambeth council.
Continue reading “Social landlords lock tenants into energy companies and fuel poverty”