MSE News Story: Millions of prepay energy consumers overcharged

Joyful

I think andrewc you need to speak to your suppliers Energy Efficiency team. I think your usage sounds high.

1carminestocky

Vestra wrote: »

Sorry if I'm being silly but what savings?

Hmmm..lack of any chance of bad debt and all the costs associated with attempted recovery/write offs? Money up front before any fuel is used (contrast this with this last winter, where it was very cold but those paying by DD were paying the same amount as they were in Summer?) That means the energy companies are eating into cash reserves until the warmer weather starts.

Joyful

I'm sure the energy companies have written off hundreds of thousands of pound due to token meters not charging customers the correct amount. I don't think your idea holds water.

1carminestocky

Joyful wrote: »

I'm sure the energy companies have written off hundreds of thousands of pound due to token meters not charging customers the correct amount. I don't think your idea holds water.

Hundreds of thousands of pounds, if true, would be a drop in the ocean compared to credit customer bad debts...wouldn't it? BG wrote off £62 million of bad debt in 2003 alone, for instance. 1% of turnover!

Joyful

Until recently Prepayment and Credit were both dealt with together in the company so I do not know if there would have been separate figures for debt from credit meters and prepayment meters. If you have them I'm sure I would find them interesting though.

1carminestocky

No, I don't have those figures but are you seriously suggesting that pre-payment meter bad debt would account for any more than a minute %tage of that £62 million? If so, why do British Gas in some cases forcibly install pre-payment meters in the homes of many of their more serious debtors? It would make no sense whatsoever.

Vestra

1carminestocky wrote: »

No, I don't have those figures but are you seriously suggesting that pre-payment meter bad debt would account for any more than a minute %tage of that £62 million? If so, why do British Gas in some cases forcibly install pre-payment meters in the homes of many of their more serious debtors? It would make no sense whatsoever.

There is a huge amount of debt that cannot be recovered from a prepayment meter, eg customer runs up big bill and ignore's reminders and warrants, prepayment meter is then fitted, customer cannot afford the repayment so leaves property along with unpaid rent and other arrears. This happens a lot.

dunloadin

Vestra wrote: »

There is a huge amount of debt that cannot be recovered from a prepayment meter, eg customer runs up big bill and ignore's reminders and warrants, prepayment meter is then fitted, customer cannot afford the repayment so leaves property along with unpaid rent and other arrears. This happens a lot.

Have been fitting meters for three years and can confirm this happens.

Another 'debt' that occurs is the monies written off when token meters are replaced that have not had their prices changed for years. A lot of companies write off this debt...as well they should as it's their own fault for not updating the tarriffs in the first place.

This practice has also had the knock-on effect of making key meters seem to be more expensive, as some people have effecively seen the cost of their electricity double due to tariffs being so out of date. If the suppliers had kept token meter tariffs up to speed then the transition to key meters would have been a lot more painless for customer and supplier alike.

1carminestocky

Vestra wrote: »

There is a huge amount of debt that cannot be recovered from a prepayment meter, eg customer runs up big bill and ignore's reminders and warrants, prepayment meter is then fitted, customer cannot afford the repayment so leaves property along with unpaid rent and other arrears. This happens a lot.

But the fact remains that the actual debt was originally run up when the punter wasn't on a pre-payment meter so that is a credit customer debt, surely. Which sort of proves my theory. I'm sure the vast majority of pre-payment meter customers aren't people who ran up debts as credit customers and forcibly had meters installed. I would imagine the vast majority of these meter punters are very long-standing ones who have no arrears - simply because it's impossible to run up a debt if you are on a meter. That's my point - the bad debt actually attributable to meter users must be neglible in comparison to credit customers. Therefore there MUST be savings with regard to meter customers in respect of bad debt write-offs/recovery costs. No? It does surprise me that working where you do you haven't thought about this before, TBH...

SwanJon

1carminestocky wrote: »

Therefore there MUST be savings with regard to meter customers in respect of bad debt write-offs/recovery costs.

I'm sure that's true, but it's a bit like saying the sky is white if you only look at the clouds.
Looking the other way - if you pay your quarterly bill at the post office, the supplier subsidises 4 transactions a year.
If you top up your meter each week the supplier subsidises 52 transactions a year.
Due to the nature of the meters and payment devices a greater proportion of prepayment customers need to contcat their supplier, and so a larger work force is required.
Then add on the cost of the meters themselves, the payment devices, extra visit from meter agencies, cost of intermediaries etc and it all adds up.
I think recently suppliers have taken a closer look and seen that the balance wasn't quite right (maybe they were pushed), and maybe they've managed to reduce some inefficiencies.
(The EC ruling was about cost to serve - if prepayment was less effieifcent, that could also make it more expensive, but wbe within EC guidelines)
ETA: I work for British Gas, usual disclaimer...