Millions of low-income households could save up to 15% on their fuel bills if the government bought electricity and gas on their behalf, a report suggests.
Energy suppliers blame price rises on wholesale price increases
Three and a half million pensioners and people on income support could save up to £60 each every year, the Institute for Public Policy Research says.
The government could then deduct the charges straight from their Income Support or Pension Credits, it says.
The plan follows price rises from suppliers like British Gas and Npower.
Gas and electricity companies offer big discounts to customers who pay by direct debit.
But many poorer people use more expensive prepay meters because they fear losing control of the cost and being cut off.
The think tank's deputy director Ian Kearns said: "If the government bought the gas and electricity direct, they could pass on the savings to the poorest and protect them from being ripped off.
"At the moment the cruel irony is the poorest people in the country pay the most for gas and electricity.
"That is not just unfair, it makes no sense for either the energy companies or the taxpayer.
"Gas and electricity companies do not want to have to use pre-pay meters because they are expensive to maintain and administer.
"At the moment they pass the extra cost on to these consumers."
The chief executive of the Child Poverty Action Group, Kate Green, welcomed the idea.
She told the BBC: "We certainly know that fuel bills are a very high proportion of the outgoings of low-income families.
"And anything that can be done to help make them more manageable is going to be very well worth exploring".
The UK has the highest number of avoidable deaths due to winter cold in Western Europe.
Before the latest prices rises, Age Concern predicted that more than 20,000 people over 65 would die between December 2005 and March 2006 from cold-related illness in the UK.
Among children, fuel poverty can lead to educational under-achievement, social exclusion, and physical and psychological ill health, industry watchdog Energywatch has said.
The government has set a target of 2010 to eradicate fuel poverty among the vulnerable - the elderly, households with children, or people who are sick or disabled.
Campaign group National Energy Action estimates there were three million UK households in fuel poverty before last month's price rises, with about half including people aged 60 and over.
British Gas blamed last month's 22% price rise on wholesale price increases and a lack of competition in European markets. Other suppliers who have raised prices said they had done so for similar reasons.
How do you pay for your fuel? Does having a meter help you? Is it worth paying more if it means you're in control of how much you spend?
It is time the Government forced the gas and electricity companies to charge all customers the same rate no matter how they pay.The power comapnies are victimising people on low incomes by making them pay more for gas and electricity, surely pre pay or card meter customers should get the same rate as they get the money up front for bills from us. Fair prices for all card meter and prepayers less profits for the fat cat shareholders.
Gary Lines, Lincoln
Most companies offer a discount for customers who pay in advance. Card meter customers are effectively paying in advance because they have to pay before they can use the product. Discounts for card meters should be enforced by the governement
Iain Duncan, Ilminster, Somerset.
I am one of the so called unfortunates who are on a prepay meter, I am of sound mind and am able to make a decision to have this type of payment. I would be totally against this idea, I know that I pay more, I know however that I will never encounter a huge bill. On a lighter note the sudden rise of utility prices was anticipated and accounted for can everybody say that? How could the government posibly know how much Gas/electric I use, I'm not saying that in principle its not a good idea but as my grandfather said 'God save us from those that mean well'
Jenny Reeves, Faversham,Kent
There is at least one company who make a point of charging the same for all types of payment, on ethical grounds. They're a not-for-profit business and I found out about them using one of those 'find the cheapest fuel bills' websites. There's also (since 2000) the government-funded Warm Front, who install insulation and more-efficient heating (including solid fuel stoves which, unlike the gas heater in the picture, don't cause damp), completely free for people on benefits. The Warm Front team complain that they spend the summer kicking their heels because people forget about winter...
Candy Spillard, York, UK
We have had a prepayment meter but now pay by billing because it makes no difference to which way you pay. The utilities are run by private profiteers and they will always find ways round the system to keep the prices up. The only workable solution is to re nationalise the utilities and a labour Government should be doing just that.
Tom Lowry, Leeds Yorkshire
The only solution is a socialist system, where the goverment controls the main and primary needs of the people. It is easy to exploit the general populace via these essential commodities, such as gas,electricity and water - hence leaving such basic needs in the claws of venture capitalist is tantamount to exposing the very vulnerable,who are supposed to be protected by the goverment,to exploitation.
Solo Awosika, London
Why not just cuddle people more that makes you lovely and warm inside. Then ask the government to make the price of fuel be fare to the poorest of us. How can charging the poorest more be fair? BOO! to the gas and electricity companies.
Mrs D Whitley, Leeds Britain
Are pre-payment meters more expensive? I was told recently by British Gas that the rate is the same as for quarterly accounts. I thought that the only difference was that there is a small discount if you settle those by direct debit.
This is a stupid debate. Every pensioner, including myself, receives a handout from other taxpayers of £200 per year towards heating bills. Shut windows, wear more clothing and save fuel by not watching endless TV. Soon cut bills by at least 15% and help reduce global warming as well.
Martin Layton, Beverley, UK
The above report contains the comment:- "Before the latest prices rises, Age Concern predicted that more than 20,000 people over 65 would die between December 2005 and March 2006 from cold-related illness in the UK." What are the facts about this prediction?
Ray Allan, Havant, Hants.
This wacky idea seems to be completely missing the point. These people use a meter to control their usage of energy. If they could control it themselves they would be paying in arrears and wouldn't have had this problem in the first place. What's the point of saving 'up to 15%'if they are going to use 20% more energy?
My view is that the energy companies should be re nationalised they are an essential part of living and should be under direct government control with no shareholders to pay dividends too the price of fuel could be reduced you still have to make a slight profit to cover for investments. same should happen to all the water companies David
David Wilson, Edinburgh
The price of gas and electricity is rising all the time, why can't the goverment subsidise the cost for the pensioners those not with high incomes who can't keep their homes heated all the time?
miss n.shah, birmingham
Sounds like a great idea, but this seems to hint at a bigger possibility of the government using common sense to 'bulk buy' goods (such as for schools, hospitals & other such areas), to act in all of the populations interests. Maybe the government should buy Tesco and then bulk buy all our food for us also... I think the implications of centralizing the buying power for electric & gas would mean masses of jobs (yet again). If they did implement this, I wonder if they think of linking this to our 'ID' cards so that we can claim our government discount offer?
Anon, Barnstaple, Devon
Energy companies are forced to include the cost according to how cusotmers pay - This was a direct result of complaints made to the regulator by customers who paid by direct debit. Energy companies are now forbidden from passing on the cost of collecting from other customers. As for the idea of the government "bulk buying" energy, no thought seems to have been given to the effect this would have on efforts to conserve energy - in that energy for this group would be provided for free at the point of use. Is this something taxpayers would be happy to subsidise? It is already clear that large numbers of people are in a situation where they would love to work, but simply cannot afford to, because they could never earn enough to cover the loss of housing benefit, etc. Do we want to make it even more difficult for them? The concept of customers paying "in advance" is also a myth. Suppliers of electricity pay in advance, as they have to buy energy before it is produced. Once electricity is produced it cannot be stored so, whatever the method of payment, end customers are always paying for electricity in arrears - which is why your energy accounts are covered under the laws regarding credit agreements. The biggest problem with the energy markets is the fact that many of the rules that govern it have been dreamt up by well-meaning people who are so intent on protecting their little group (usually the "fuel poor") the wider implications are never thought through. It would help if they stopped talking about "fuel poverty" as though it was divorced and separate from ordinary poverty. Take care of Poverty and all it's little nieces and nephews will take care of themselves.
Roy Harris, Bristol