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Call to scrap energy meter charges

Published 25/06/2015

Customers with prepayment meters can face higher electricity charges
Customers with prepayment meters can face higher electricity charges

Ofgem has called on energy companies to abolish charges for prepayment meters (PPMs) after finding that some of the poorest customers are paying up to £180 to have them installed.

The regulator found around 60% of suppliers do not charge for installing the meters - usually used as a last resort for those struggling to manage the cost of energy - but those that do demand up to £180.

Almost all suppliers (95%) do not charge for removing the meters, but the 5% who do charge up to £160.

However it found well over half of suppliers (60%) charge prepayment customers an average security deposit of £211 if they want to pay by standard credit or direct debit.

Ofgem said it would work with suppliers to abolish installation and removal charges ahead of an autumn consultation, saying the costs could deter many customers from switching and removing them could help the poorest households save up to £300 a year if they switched from prepayment meters to direct debit.

The regulator also announced it is to consult on strengthening consumer protections around security deposits to either end them altogether or provide clearer guidelines to suppliers.

More suppliers than ever were offering PPM tariffs, Ofgem said, but there was limited choice overall compared to direct debit and standard credit.

Some suppliers claimed there were technical barriers to providing a greater choice of tariffs for PPM customers, which Ofgem said it was investigating.

Ofgem partner Philip Cullum said: "Ofgem is concerned that charges and costs for using a PPM fall on those least able to afford them.

"That's why we want to remove barriers, deliver greater protections and offer more choice for prepayment customers to ensure they're able to find the best possible deals.

"We are calling on suppliers to work with us to abolish charges as soon as possible."

Citizens Advice chief executive Gillian Guy said: "Prepay energy consumers pay more for a second rate service. Too many prepay customers can also feel locked out of the best deals by unfair charges.

"Some suppliers are helping customers with fairer tariffs and new ways of managing energy use, but others are getting worse.

"It is encouraging that Ofgem has reviewed this part of the market and the regulator is right to suggest scrapping unfair charges.

Figures released by Ofgem last month revealed that thousands more PPMs have been forcibly installed in people's homes in recent years.

Ofgem, which supplied the figures in response to a freedom of information request from BBC Radio 5 Live, said it was "looking into reasons behind the increase" and added that installing PPMs under warrant should be used as a "last resort".

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