MSE News Story: Millions of prepay energy consumers overcharged

Cardew

Like most people here I have no idea of the actual costs of administering the pre-pay meter network.

I do recall the bosses of the 'Big 6' giving evidence to the Parliamentary Committee on Energy prices a year or so ago and stating that the additional costs of administering the scheme was not covered by the additional income.

They agreed that, in general, pre-pay customers were the less wealthy members of society and least able to afford higher prices. However they made the point that reducing the differential between pre-pay prices and 'normal' tariffs(which has happened) would in-effect be a cross-subsidy with the 'normal' tariffs paying more.

That stance seems to be at odds with the report.

I wonder who is correct?

1carminestocky

SwanJon wrote: »

I'm sure that's true, but it's a bit like saying the sky is white if you only look at the clouds.
1. 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.
2. 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...

1. SJ, your company (and the others) give a discount for people paying 12 times per year instead of 4! Why is that, I wonder?


2. Maybe? :D

littletommytucker

This is all such a load of rubbish, and so typical of the UK media. Someone, somewhere makes a comment on something... and the media then start to use the headline “blah blah blah”... was said by somebody somewhere at some point. They don’t comment on it being true or not, they simply report the “FACT” that someone has said it.
Its clear for anyone with common sense to appreciate that a customer with a standard meter paying on a monthly Direct Debit will cost a company less than a customer with a prepayment meter.
Who pays for the transaction fee every time you top your key up at the local paypoint? Who pays for the engineer to visit your property at 3.00 in the morning when you get back from a night out to find out a fault with the meter means your supply has been disconnected?
British Gas do not want their customers to have prepayment meters, as even though they cost more to the consumer, they still make less profit off them. I know that the agents that take phone calls actually get marked down when they are quality assessed if they offered a prepayment meter as a first resort to someone struggling to pay their bills, as the company would much rather have them paying on a Direct Debit or Payment Card as these are cheaper options for the company. They would only want to fit a prepayment if the customer was a credit risk, had defaulted several payment plans previously, or simply couldn’t afford the amount of energy they usually consume.

Cardew

littletommytucker wrote: »

This is all such a load of rubbish, and so typical of the UK media. Someone, somewhere makes a comment on something... and the media then start to use the headline “blah blah blah”... was said by somebody somewhere at some point. They don’t comment on it being true or not, they simply report the “FACT” that someone has said it.
Its clear for anyone with common sense to appreciate that a customer with a standard meter paying on a monthly Direct Debit will cost a company less than a customer with a prepayment meter.
Who pays for the transaction fee every time you top your key up at the local paypoint? Who pays for the engineer to visit your property at 3.00 in the morning when you get back from a night out to find out a fault with the meter means your supply has been disconnected?
British Gas do not want their customers to have prepayment meters, as even though they cost more to the consumer, they still make less profit off them. I know that the agents that take phone calls actually get marked down when they are quality assessed if they offered a prepayment meter as a first resort to someone struggling to pay their bills, as the company would much rather have them paying on a Direct Debit or Payment Card as these are cheaper options for the company. They would only want to fit a prepayment if the customer was a credit risk, had defaulted several payment plans previously, or simply couldn’t afford the amount of energy they usually consume.

I must admit that was always my understanding of the situation, and unless all the bosses of the Big 6 lied to the all party Parliamentary Committee on Energy( a dangerous thing to do) they think so as well.

However it appears that we were all wrong;) as no other than Carmine - who never misses a chance to have a go at all energy companies(bar one!) - states:

We all know the real reason that most energy companies charge for removal of a pre-pay meter is to discourage punters from doing it. Pre-pay has been a lovely little earner for them over the years.

Well I for one didn't know!!!

adprob

Cardew wrote: »

However it appears that we were all wrong;) as no other than Carmine - who never misses a chance to have a go at all energy companies(bar one!) - states:



Well I for one didn't know!!!

Do we know who the "bar one" is?

1carminestocky

No idea why certain posters are getting your knickers in a twist, I stated earlier on in the thread that as long as your companies haven't charged more than £87 extra per year for the punters who pay by pre-pay meter you're laughing. This is OFGEM'S figure, not mine. Only problem being I think you very probably have, lol, as evidenced by the rather unsubtle reductions last year ('we have made efficeincy savings and passed them on' lol). The EU, for all its corruption, inefficiency and greedy MEPs, is pretty hot when it comes to protecting the average joe in the street (unlike OFGEM, of course) and I for one will be watching developments on this one with interest. Oh yes. Could this turn into a bank charges saga?

newlywed

1carminestocky wrote: »

No idea why certain posters are getting your knickers in a twist, I stated earlier on in the thread that as long as your companies haven't charged more than £87 extra per year for the punters who pay by pre-pay meter you're laughing. This is OFGEM'S figure, not mine. Only problem being I think you very probably have, lol, as evidenced by the rather unsubtle reductions last year ('we have made efficeincy savings and passed them on' lol). The EU, for all its corruption, inefficiency and greedy MEPs, is pretty hot when it comes to protecting the average joe in the street (unlike OFGEM, of course) and I for one will be watching developments on this one with interest. Oh yes. Could this turn into a bank charges saga?

My gas provider charges £167 a year standing charge for the privilege of prepay :rolleyes:

1carminestocky

Oh dear, lol. I wonder if they can prove it costs that much to administrate compared to a punter on credit meter?

1carminestocky

littletommytucker wrote: »

This is all such a load of rubbish, and so typical of the UK media. Someone, somewhere makes a comment on something... and the media then start to use the headline “blah blah blah”... was said by somebody somewhere at some point. They don’t comment on it being true or not, they simply report the “FACT” that someone has said it.
Its clear for anyone with common sense to appreciate that a customer with a standard meter paying on a monthly Direct Debit will cost a company less than a customer with a prepayment meter.
Who pays for the transaction fee every time you top your key up at the local paypoint? Who pays for the engineer to visit your property at 3.00 in the morning when you get back from a night out to find out a fault with the meter means your supply has been disconnected?
British Gas do not want their customers to have prepayment meters, as even though they cost more to the consumer, they still make less profit off them. I know that the agents that take phone calls actually get marked down when they are quality assessed if they offered a prepayment meter as a first resort to someone struggling to pay their bills, as the company would much rather have them paying on a Direct Debit or Payment Card as these are cheaper options for the company. They would only want to fit a prepayment if the customer was a credit risk, had defaulted several payment plans previously, or simply couldn’t afford the amount of energy they usually consume.

I agree - it's the AMOUNT extra that it costs the energy supplier that's the important bit. And my argument on this thread (amazingly it never seemed to occur to the posters in here who are 'in the industry' ) is that some of the extra costs associated with administering a pre-pay meter account will be offset by the fact that there will be absolutely zero bad debt that has accrued on that account whilst it has been pre-pay. The most recent figures I can get are 6 years ago and credit customer bad debt write off accounted for ONE PERCENT of BG's total annual turnover. £62 million was written off. But that's not the whole picture, is it? How many millions were spent actually trying to recover this money before it was deemed irrecoverable? Also remember that in 2003 this country's economy was booming, people had money in their pockets. One can only imagine the level of bad debt the energy suppliers have to write off in these recessionary times but I'm suspecting it will have grown exponentially. But ONLY from credit customers, NOT pre-pay customers...

adprob

newlywed wrote: »

My gas provider charges £167 a year standing charge for the privilege of prepay :rolleyes:

How does that compare to the standing charge on their credit meter tariff?