Dawn Butler, Labour MP for Brent Central, accuses the big six energy companies of lining their pockets by "taking money from the poorest customers" who are on prepayment meters. She also calls for vulnerable people to be prioritised during the roll-out of smart meters. Views do not necessarily reflect those of MoneySavingExpert.com.
As savvy consumers I suspect you'll agree that customers across the UK are being ripped off on their energy bills.
Indeed, that was the recent finding of the Competition and Markets Authority (CMA), which revealed customers of the big six energy suppliers (British Gas, EDF, E.on, Npower, Scottish Power and SSE) are paying an eye-watering £1.7 billion a year more for energy than they would if the energy market was more competitive.
While that may sound like shocking reading to you, the CMA's critics described this preliminary report (ahead of the full report due in June) as being undercooked, letting the big six off the hook and not going far enough to ensure that you, the customers, are not paying over the odds.
The report also said that one of the biggest issues facing the energy industry is prepayment meters. I couldn't agree more. Prepay customers pay between £270 and £330 extra per year.
The energy companies say it costs them more to supply prepay customers, yet according to Ofgem it only costs £80 more to supply. The rest is money taken from your pockets and put in theirs. It's Robin Hood in reverse: taking more from the poorest customers to line the pockets of the energy companies.
This affects 16% of all energy users across the UK, many of whom feel they are being taken for a ride. This includes my constituent, Mr Hamilton.
Mr Hamilton is 72 years old and suffers from health problems. He one day found a letter on his doorstep notifying him that he was being disconnected and a prepay meter was being forcibly installed. Mr Hamilton was left in the cold without energy for two days, and after that with a mere £10 emergency credit for almost a whole month. And to this day he is forced to pay a premium for his energy while receiving an inferior service.
Sadly, there are many more people out there like Mr Hamilton. In the Christians Against Poverty report 'The Poor Pay More', Joanne, who has brittle bone disease and is paralysed from the waist down, tells a similar story.
After she was put on a prepay meter her condition worsened as the gas and electricity were constantly cutting out. She would have to ask neighbours to borrow food as so much of her income was spent on energy bills. In Joanne's own words this left her feeling "ashamed, like scum of the earth, the lowest of the low".
If you're disabled and on low income, the extra cost and inconvenience of prepay meters have a profound and severe impact on quality of life.
It's because of Mr Hamilton, Joanne and the millions of others like them that I launched a campaign to end the '#PrepayRipOff'. I'm calling on the Government and energy companies to take action now to reduce prepay prices, and to prioritise the most vulnerable consumers in the smart meter roll-out.
Smart meters give you near real-time information on energy use – expressed in pounds and pence. They're also designed to bring an end to estimated billing – you will only be billed for the energy you actually use, helping you budget better.
The Government wants energy suppliers to install smart meters in every home in England, Wales and Scotland, with the goal of every home having a smart meter by 2020.
What I'm asking isn't complicated. This is my simple three point plan for a fairer energy market:
- Protect the consumer.
- Prioritise smart meter roll-out to the most vulnerable prepay consumers.
- Simplify this needlessly complex energy market. From bill layouts to tariffs, plain English and transparency are vital for a fair and competitive market.