Why is prepayment so much more than DD

dude89

fabricator wrote: »

In my case i,when i got into bother with money i phoned BG and asked if i could go onto a PPM as it would make my situation easier to manage, they told me they are only fitted if you have arrears which i didnt so they told me to stop paying my bills and ignore reminders until it got to a min of £360 then phone back and they would get one fitted so this is what i had to do and swalec told me exactly the same
I cant see how a computerised system for PPM's can cost more than DD system

A lot is the cost of the pay zone/pay point network. The cost of the cards /keys.

Bluebirdman_of_Alcathays

fabricator wrote: »

In my case i,when i got into bother with money i phoned BG and asked if i could go onto a PPM as it would make my situation easier to manage, they told me they are only fitted if you have arrears which i didnt so they told me to stop paying my bills and ignore reminders until it got to a min of £360 then phone back and they would get one fitted so this is what i had to do and swalec told me exactly the same
I cant see how a computerised system for PPM's can cost more than DD system

I don't believe you.

[Deleted User]

matelodave wrote: »

Frequently PPMs are more expensive because they are also recovering arrears as well - the unit & standing charge rates should be about the same as the standard variable tariff.

Too true, we are a nation of debtors and borrowers , nearly all the new prepays I see going in now are to recover debt . People have no idea about gas and electric bills and just let the bills mount until the prepays are fitted, sometimes under warrant. The big credit bust from 2008 has nt changed the way a lot manage their lives, just look at Wonga and all the rest flourishing. I ve seen prepay meters mushroom over the 14 years knocking on doors from maybe just the odd one to whole streets nowadays

Nada666

matelodave wrote: »

Frequently PPMs are more expensive because they are also recovering arrears as well - the unit & standing charge rates should be about the same as the standard variable tariff.

No on both counts.

Arrears repayment on prepayment meters is more readily set at a lower amount than with credit meters (but repaying arrears is not in the equation in the first place.)

Standard variable tariffs are expensive. A prepayment tariff being similar is hardly an endorsement.

fabricator

Why would I lie bluebirdman
I remember it very we'll and it is the truth

Bark01

fabricator wrote: »

Why would I lie bluebirdman
I remember it very we'll and it is the truth

Could just be your username.

thriftylass

MillicentBystander wrote: »

Said it before, if every household in the UK was on PPMs the nation's gas and electric consumption would plummet overnight.

Nada666 wrote: »

Perhaps, but the following night notices of a massive price increase would be sent out to maintain the [STRIKE]profits[/STRIKE]integrity of the networks.

MillicentBystander wrote: »

Preaching to the converted here, Nada666. Which is why I always react cynically to the industry/Govt telling us to consume less in order to spend less on our gas and electric bills. We all basically know that once an industry like gas and electric is in private hands they simply must maintain profit/dividend levels no matter what.

Exactly, that's what has happened in Germany to the bin collection. There we don't have council tax, so you pay for every black bin of general wast you put out. Recycling bins are free and encouraged so people used them more and reduced their household waste also to save money. Only for the prices then to go up as the waste disposal companies didn't have enough wast to burn etc.

It's fair enough to encourage us to use less gas and leccy or produce less waste for environmental reasons but the monetary incentive doesn't work.

Bark01

Prepayment carries extra cost to cover the third party companies (itron/Siemens) needed to maintain the card/key infrastructure. Suppliers send their prices to these third party companies and they load them into the system. This will end under SMART meters as suppliers can cut out the middleman

The third party infrastructure has a limited volume hence only a small number of tariffs are offered for PPM, again under SMART this restriction will end.

Prepayment however benefits from the direct link between payment and use and also payment is received before use. Yes under certain circumstances customers can build up debt on prepayment but its not as easy as for credit customers

Cash/Cheque customers direct costs are less than that of PPM as they don’t have to cover the third party, but the cost of bad debt created by cash customers can outweigh the extra ppm costs.

Direct Debit customers provide a steady cash flow and whilst also are able to build up bad debt the level of this is a lot lower than credit customers. As suppliers have the customers bank details this adds an extra level of security for chasing the customer for any debt owed.

Under SMART ppm will become the model of choice for suppliers but it will be based on in home payment not going down the shops with your card/key. Whether customers but into this or not is another question!