Alan Whitehead

Labour Party | Southampton Test

SOUTHAMPTON MP TO SLAM UNFAIR ENERGY PRICING

Alan Whitehead, MP for Southampton Test, is backing the National Housing Federation’s campaign for energy companies to set fairer prices for customers on prepayment meters.

Leading an adjournment debate in the House of Commons tonight, Dr Whitehead will point out that prepayment meter customers tend to be on lower incomes and at greater risk of fuel poverty than other consumers – yet pay much more for their energy.

Today the National Housing Federation is publishing a league table, based on figures from the consumer watchdog Energywatch, showing that energy giant Npower is the worst offender. It charges up to £110 per year more to its prepayment meter customers than to standard credit customers who pay by cheque.

The table shows that the next three worst offenders after Npower are Powergen, British Gas and SSE.

More than 3 million people nationwide pay for their energy via prepayment meters. The higher charges made to prepayment meter customers have been recognised as a major contributing factor to fuel poverty, where those on low incomes struggle to pay for the gas and electricity they need.

Fairer pricing on prepayment meters would help the Government to meet its statutory target to eradicate fuel poverty for vulnerable people by 2010.

Overall, the Federation says that the main suppliers are charging their prepayment meter customers millions of pounds more for their energy every year.

The Federation is calling on all the main energy companies to equalise their prepayment meter charges with their standard credit tariffs.

David Orr, chief executive of the National Housing Federation, said,
“Npower, Powergen, British Gas and SSE should be ashamed of themselves. They are ripping off poorer customers to fund discounts for those most able to pay. This kind of unfair pricing needs to stop. It is clear that these companies are ignoring their corporate social responsibility. It’s time to bring prepayment meter customers in from the cold.”

Alan Whitehead MP added,
"Energy companies are using unfair tarriffs on prepayment meters to rip off their most loyal customers and some of the poorest people in society – even though these customers offer 100% security of payment. This is wrong.
 
"Ofgem wants to tackle this problem by persuading prepayment customers to switch supplier but this simply won't work. Many are not aware that they are paying more and only two of the six major energy companies have equalised their prices.

“Instead the Government and Ofgem should take action now to force all the remaining companies to equalise their tariffs and stop the scandal of the poor paying more for gas and electricity."

The league table is based on Energywatch’s calculation of average dual fuel tariffs for typical energy consumers. It shows that Scottish Power is the only supplier to bring prepayment meter charges below standard credit tariffs. The Federation is calling on the other companies to follow Scottish Power’s lead.

Average annual price difference between prepayment meters and standard credit terms

Source: Energywatch.

Average dual fuel tariffs – per year

Supplier Average Standard Credit Average PPM Average difference
SC to PPM
Npower £911 £1,021 +£110
Powergen £916 £1,001 +£85
British Gas £914 £994 +£80
SSE £872 £935 +£63
EDF £908 £934 +£26
Scottish Power £961 £931 - £30

Based on an average annual gas consumption level of 20,500kWh per annum, and an average annual electricity consumption level of 3,300kWh per annum.