Page last updated at 00:05 GMT, Saturday, 15 November 2008

Energy firms 'profit from poor'

By Sarah Pennells
BBC News

A cooker hob
Energy firms are making more money from customers on pre-paid meters.

Energy suppliers make some of their biggest profits from their poorest customers, a watchdog has said.

Firms make about half a billion pounds a year in extra charges from prepayment meters, Consumer Focus estimates.

About 1,000 prepayment meters a day are being installed in households where people have got into debt over their energy bills, it says.

Industry body the Energy Retail Association says many people like the meters because they help them budget.

But the industry is now under pressure from the regulator, Ofgem, to cut the prepayment tariffs.

They're being pushed onto prepayment meters
Tony Herbert, Citizens Advice

Consumer Focus says some customers are being forced to use prepayment meters.

It said energy firms are using customers who pay by prepayment meter to subsidise customers who can get the cheapest deals.

"Companies could be making up to 550m a year from extra charges they charge on prepayment meters," said the watchdog's Jonathan Stearn.

"The energy companies are making the most money out of those on prepayment meters, and often those are the people on the very lowest incomes."

Rules broken

Tony Herbert, Social Policy Officer at Citizens Advice, says its offices have seen a small number of cases where companies have pushed customers onto prepayment meters when they have not given them other options to pay any outstanding debt.

This is against the companies' own rules, he says.

"These people have built up debt but they are not being offered a range of payment methods and they're not being offered affordable repayment rates," he said.

"They're being pushed onto prepayment meters."

Samira Naji, who lives in North London, had a prepayment meter fitted by E.ON after the firm said she owed over 700.

The problem was that she had been paying another supplier - EDF - for her electricity and didn't think she owed a penny.

Because of a mix-up, she was paying the wrong company.

'Shocked and confused'

After weeks of disagreement E.ON got a court warrant to fit a prepayment meter, and - while she was on holiday - removed the locks to gain access to her flat.

When Ms Naji returned from holiday, she thought she had been burgled.

"I was really, really shocked and confused. I didn't realise they could come into my property, especially if I was away on holiday."

When contacted by the BBC EDF, the company Ms Naji had been paying for the last six years, said it would refund the disputed energy bill.

E.ON said it would write off the court costs and try to agree terms with Ms Naji to remove the prepayment meter.

Your comments:

I am so upset because just two days ago I called my supplier because of an ongoing query about my account and they told me that I had to have a meter fitted to clear my bill. I was told that they could as a matter of goodwill halve my payments to them at 15 per week on top of my normal consumption. I told them that I couldn't afford to pay so much a week because I am disabled and on benefits.
Beverley, Plymouth, Devon

I am on a low income & when I asked Eon about removing my prepayment meter & go on direct debit I was told it would cost me 50. It seems you cant get out of this trap even if you want to.
Ian Walters, Ipswich Suffolk

I moved into my flat in last year. My flat has a pre-paid meter. I used to pay about 7 per week. At the beginning of October my meter shot up, and I now pay 25.00 per week! I'm a single working mother and this is crippling me. I'm not sure who my supplier is as there is no indication on the meter. When I call to find out who my supplier is there is confusion with my flats address. I want to know why it's SO expensive and am I due a rebate!
Charlotte, Brighton

I watched with some interest the debate on this morning's news regarding pre-payment meters. I'm afraid the impression given was that those on these meters are all somehow in debt. I live in a small privately rented flat. Because the lease is short term the landlord had quite understandably installed these meters. I am not in debt. Nevertheless I struggle to pay the costs and as I suffer from rheumatoid arthritis, I need to have the heating on more than I would like. The government should ORDER these energy companies to change.
Roger Burt, Wick, Highland

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