prepayment rules are wrong

sithmaster

Hi all,
Has anyone else noticed that is you pay for you gas and electric by direct debit you get a discount about 6% in some cases, but if you pay by prepayment you get nothing.

The energy companys say this is for early payment and they can be sure they get there money.

However I disagree, direct debit customers pay for there gas/ electric as they use it and usually go into credit in the summer and debit in the winter, and if someone wants to come off direct debit they can cancel it with the bank easily.

But with prepayment we always pay for our supply before we use it so where is our 6% discount, after all we cant go into debit and well if we say im not going to pay for it then the meter runs out.

I personally think everyone on prepayment should phone up the company they use and insist on a early payment discount! I just tried to change from prepayment and eon would not let me, i guess they dont want me to have a discount so they can have high profits

HappyMJ

If you have no debt on the meter and your credit is good then go onto a credit meter. Some companies will fit a credit meter for free.

Richie-from-the-Boro

- as HappyMJ says if (1) your credit history is clean and there is (2) no debt on the meter .. .. change it
- if you meet the above criteria and they won't change it come back here and ask for advice

undaunted

You could always shop around.

Until fairly recently you'd have paid even more if paying by pre payment meter so they / "regulators" seem to think they are now doing you a favour by charging standard rates.

It usually claimed that pre payment meters cost more to administer. They conveniently forget the benefits you mention in my opinion but until there is a regulator with the back bone to challenge them more seriously unscrupulous energy companies will probably continuue to do whatever they can get away with

Cardew

You miss the point that the pre-pay tariffs are heavily subsidised.

They were considerably more expensive than Standard Tariff which reflected the additional costs of administering the system. It was only political pressure the forced the big 6 companies to reduce PP tariffs to their present level.

In any case you are incorrect in stating that the Direct Debit discount is given because of early payment. Often DD customer are in debit and so the companies are getting payment late. The reason all companies like DD customers is apart from a regular cash flow, it is simply cheaper to administer the account:

http://rapidataservices.com/benefits/direct-debit-benefits/

Cardew

undaunted wrote: »

You could always shop around.

Until fairly recently you'd have paid even more if paying by pre payment meter so they / "regulators" seem to think they are now doing you a favour by charging standard rates.

It usually claimed that pre payment meters cost more to administer. They conveniently forget the benefits you mention in my opinion but until there is a regulator with the back bone to challenge them more seriously unscrupulous energy companies will probably continuue to do whatever they can get away with

I do wish you would have some balance in your posts.

If you care to search MSE or the web about 3 years ago you will find the links to a long document of the minutes (and video) of the evidence given by the bosses of the Big 6 to the Parliamentary Committee on Energy on this issue - amongst many others.

At that time pre-pay(PP) tariffs were considerably more than Standard Tariffs and the Big 6 were questioned at length about justification for that price differential. All stated that even those higher prices did not cover the increased costs of administering PP tariffs.

Some while later there was a debate in Parliament about this issue and it was argued(with justification) that the higher PP prices impacted disproportionately on the poorer members of society.

The Chancellor announced that he had written to the energy companies 'threatening'(my definition) that unless they reduced prices - as well as setting aside money for social tariffs - legislation would follow.

Look it up in Hansard.

The companies obliged! So the position is that both PP tariffs and 'social tariffs' are subsidised by other customers - it really is a simple case of 'Robbing Peter to pay Paul'.

Your implication that PP customers are exploited by 'seriously unscrupulous energy companies' is incorrect.

mattcanary

Cardew wrote: »

I do wish you would have some balance in your posts.

If you care to search MSE or the web about 3 years ago you will find the links to a long document of the minutes (and video) of the evidence given by the bosses of the Big 6 to the Parliamentary Committee on Energy on this issue - amongst many others.

At that time pre-pay(PP) tariffs were considerably more than Standard Tariffs and the Big 6 were questioned at length about justification for that price differential. All stated that even those higher prices did not cover the increased costs of administering PP tariffs.

Some while later there was a debate in Parliament about this issue and it was argued(with justification) that the higher PP prices impacted disproportionately on the poorer members of society.

The Chancellor announced that he had written to the energy companies 'threatening'(my definition) that unless they reduced prices - as well as setting aside money for social tariffs - legislation would follow.

Look it up in Hansard.

The companies obliged! So the position is that both PP tariffs and 'social tariffs' are subsidised by other customers - it really is a simple case of 'Robbing Peter to pay Paul'.

Your implication that PP customers are exploited by 'seriously unscrupulous energy companies' is incorrect.

Ah yes Cardew, but you have ignored the fact that when this debate was going on, cardmeters were still being used for electric. These were quite costly to administer because a representative of the supplier had to physically go around to all properties with prepayment meters to reset the prices when they were changed. If this was not done, the customer would still be charged at the old (wrong) prices (and this did often happen).

Nowadays all customers have keymeters. These get automatically reset to the new prices if they change, when the customer goes to the top-up outlet to get credit put onto the key.
This must reduces a substantial amount of the costs to the supplier.

In addition, as has already been said the supplier is guaranteed to get their money upfront with a prepayment meter (unless the customer has tampered with their meter). Why else would suppliers be so keen to get a prepayment meter installed into a property if the customer goes into debt?

And why are many suppliers so reluctant to remove prepayment meters once they have been installed (even if the customer moved in after the prepayment meter had been fitted). Surely if they cost so much to maintain, the supplier would be keen to get the prepayment meter taken out??!!

A customer can easily set up a Direct Debit scheme on their account, only to cancel it before the payment is due to go out of their bank account (or not have enough money in their bank account to cover the monthly payment). In addition, many Direct Debit customers are very blase about things. They won;t check their account to make sure their payments are set at the correct amount. Many don;t send in readings for months/years at a time when they are estimated leading to the account ending up massively in debt / credit. A lot of people do really think that once a monthly amount has agreed that will always be correct, regardless of how much they use.

You won;t get any prepayment meter customers and few customers that pay their bill by payment card / quarterly bill think along these lines!


Direct Debits are not the holy grail - either for the customer or the supplier. It is daft that you get such a big discount for paying by Direct Debit.

Mind you, there is one advantage for the supplier - they can set the monthly Direct Debit instalments up for an amount that is higher than what they think the customer will actually use - resulting in a nice credit building up on the customer's account. Of course, this means that the customer isn;t necessarily paying less for their electric / gas by Direct Debit, compared to other methods in the short term. Additionally, the utility company can earn interest on the credits that develop on such accounts before they refund the customer (or never refund the customer -just alter future monthly payments accordingly). A nice littlew earner for utility comanies, I'd say!!

HappyMJ

The cost of collecting a direct debit is 20p per month. The cost of a £10 top up onto a key is 44p. 100 top-ups per year (twice a week @£10 each) will cost the supplier £44. The cost of collecting 12 monthly direct debits of £80 each is £1.20. The saving is passed onto the customer paying by direct debit by charging them £960 per year against the £1000 paid by the customer paying by key meter.

There is no nice little earner for the utility company as you say. I have control of what I pay by direct debit I do not let the amount be dictated by the supplier. I currently have £100 of credit in the build up to winter that could be in my savings account and that would earn about 25 pence per month. About £3 per year if my balance was always £100 in credit which it isn't. It usually ends up at around zero by the end of winter then gradually builds up over the summer.

chanz4

70% of customers yes should get a discount, but flip the coin a bill is due within 14 days would you prefer late payment fees each month.

E.ON_Company_Representative

Hi sithmaster,

I hope you don't mind me popping on to this thread.

I agree with the other posters, if you want to get discounts for paying promptly, you might be able to get a credit meter, there is a criteria we have to follow. Give us a ring and we can see if you are eligible and we'll give you all the information.

unfortunately you don't get a discount when you are on a Prepayment meter, but I will pass your feedback on.

Amy:)

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System

Whats a credit meter? ive heard of prepayment meters but not a credit meter.