MSE News: Ofgem wants fees scrapped for prepaid energy meters

Interesting that it's all the cheaper companies. People can't have it both ways. If they go for a smaller company for cheapness then those can't afford not to charge for changing the meters.

So an energy company has to arrange for a qualified engineer to go to the property (not cheap) and fit an expensive bit of kit (they are more expensive than normal meters). In many cases the old meter will probably have to be scrapped at a loss as there is little demand for them (due to the drive for "smart meters"). They tend to cost more to administer - more likely to go wrong and need an engineer to go out and more likely to have customer contact support for lost payment card/key (again sometimes requiring an engineer to go out and add emergency credit).

The energy companies have little hope of recouping all those costs, because a shop is taking comission every time the customer buys energy, eating into the margin. Generally the users of prepayment meters are tenants and at some point, either due to a change of mind or a change of occupancy, the energy company will get a call asking to take out the meter and change it back. Out they come again, sending an engineer, taking back this expensive bit of kit which then sits in a warehouse until it gets scrapped or someone else phones up wanting a prepay meter and off the engineer goes again.

Sure, granny Smith who's been in her council house 20 years and has a prepayment meter because she prefers it, keeps plenty of credit on it and never loses her payment card and seldom rings the gas/electric "board" will be a profitable customer. But in reality most aren't, and so the energy suppliers aren't keen on them.

Forcing all suppliers to offer free prepayment meters will push up costs which will have to be recouped through raising tariffs. Then everyone will be paying more to subsidise them, which I object to. Many services charge a surcharge if you don't use their most economical payment method, the most common being surcharges if you use a credit card or if you don't pay by direct debit.

If people can't get their meter changed free by their present supplier, pay the price or change to a more expensive supplier who will do it for nothing. Or, if you're really crafty, change to the company who will do it for free, then switch again to the cheapest provider. Simples.

This is good news

davidgmmafan wrote: »

It's been said many times but it is worth saying again. There ARE extra costs associated with prepayment meters. I 'm not sure why the regulator doesn't understand this and spreads mis-information.

There are extra costs such as the third party pay point infrastructure but there are also savings such as a minimal bad debt risk. The reduction in bad debt risk is a greater saving than the extra costs, but not by much. Prepay should be slightly cheaper than credit but more expensive than DD.

I think OFGEM are just showboating unless they are advocating that credit customers cross subsidise prepayment customers by smearing prepayment administration costs across everyone elses bills? Maybe OFGEM should take a look at themselves for a change. A commitee of fat cats being paid fortunes and having lovely gold star civil service pensions.