UK Energy Suppliers Profit From The Poor?

UK Energy companies have been accused by a watchdog organisation of unfairly profiteering from poor and low income users when compared to more well off customers.Energywatch

Energywatch , an independent gas and electricity watchdog have accused the suppliers of making £296 million in unjustified top-up charges for those on low incomes using pre-payment meters when compared to those more able to pay via direct debit.
In addition these companies are estimated to be charging customers who use pre-payment meters £543 million more than direct debit customers.

Social Tariff
Many of these low income ‘fuel-poverty’ users receive or can receive a special social tariff aimed at protecting the vulnerable from the rising cost of gas and electricity which varies from supplier to supplier but can be as much as a £122 discount a year. However the watchdog found that this discount, in many cases, was more than compensated for by the higher top up fees and per unit fuel tariffs then put in place on the same vulnerable customers.

The full Energywatch report(PDF)

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3 thoughts on “UK Energy Suppliers Profit From The Poor?

  1. It’s a long-standing paradox that the wealthy often get things cheaper than do the less well off because they benefit from the ability to pay up-front.

    I remember that when I was a kid we had what is now called a pre-pay meter for the electricity. It was hidden away under the stairs and you went looking for it with a torch. My mother kept a pile of coins on top of it for when the lights went out until someone pointed out that there was a little dial, like the petrol gauge in a car, showing how much credit was left, so you didn’t have to wait for darkness before putting in more money!

    Every now and again, they would adjust the meter so that you got less electricity per coin. When the meter was emptied, you got some money back because the meter overcharged. As a child I was mystified by this “free money” until I understood the system.

    These days, my exalted financial position (slightly on the plus side of the poverty line!) allows me to pay monthly by direct debit. This means that the power company always has more of my money than I have actually spent on fuel. I guess they are making a mint by investing all this surplus cash. (Not just mine, of course – everyone’s.)

    When I was a kid we heated the house with coal fires and paraffin heaters. When the weather got cold, we put on extra clothes. That wouldn’t work these days when everyone expects to live and work in a shirt-sleeve environment no matter what the weather is doing.

  2. You’re right of course. It’s generally a rip off world if you’re poor whilst the better off get rewarded.My brother has a pre pay meter that he has to buy cards for. We used to pay by direct debit until we tried to change energy supplier who then made it as difficult as possible to move until they’d eaten up the reserve of money they had of ours in hand by steadily upping the direct debit amount each month (real sharp practice) so we kind of lost the ability to trust direct debit with an energy supplier. I guess there’s less option for coal fires and paraffin heaters these days (many rental agreements will specifically exclude their use anyway).

  3. I agree with what Silver Tiger says – the poor always have to pay more for everything really – paying up front or buying in bulk is always cheaper.

    Aside from that issue, I get very cross by the current move to get us to pay for absolutely everything by direct debit. I have had a few bad experiences with it and now as a point of principle I refuse to do it at all unless there is no choice. It is a silly principle to have of course because I end up paying more and often it is actually more convenient for me to pay by DD. But it is one of my little stands!

    We are, of course, an environmentally household here (well other than all the fumes we emit) and we have a multi-fuel stove on which we burn old copies of The Guardian made into bricks by my sons using a squasher thing (I was going to say Press but it seemed a bit inappropriate!). But running a multi-fuel burner is only possible if you have plenty of space to store/make the fuel and a chimney which many flats would not have. Our house is always toastie warm and ironically my fuel bills are low.

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