MPs debate energy charges for non-direct debit payments, Tuesday 4 Feb c.4.00pm

UKParliament

Our goal is to post up information on work undertaken in the House of Commons that has a consumer focus but which may not be highlighted elsewhere.

We have posted this on the Energy board because we thought some of you might be interested in the topic of debate. We encourage discussion and comments concerning the topic or content of this thread.


Energy company charges for payment other than by Direct Debit – Backbench Business Debate

Due to take place Tuesday 4 February at c.4pm* in the House of Commons Chamber


The motion for debate is:

That this House is disappointed that 17 energy companies in the UK charge their customers more if they do not pay their bills by direct debit; acknowledges that some firms do not charge their customers any extra at all; notes that Department of Energy and Climate Change statistics show that this adds £114 to the average consumer’s bill; further notes that 45 per cent of people do not pay their energy bills by direct debit; recognises that over one million people in the UK do not have access to a bank account; believes that these charges are a stealth tax on the poor; and therefore urges Ofgem to hold an inquiry into these practices, encourages energy companies to operate with more transparency, and urges the Government to consider ways of limiting these charges, such as by introducing a cap.


Representation for the Debate on Energy company charges:

Robert Halfon, Mr. Elfyn Llwyd, Dr Julian Lewis and Albert Owen made representations for this debate. A segment of their representation is included below:

Robert Halfon: Some weeks ago, a pensioner in my constituency of Harlow contacted me to say that she had had a letter from her energy company, which was going to charge her £63 extra a year because she did not want to pay by direct debit, even though she always pays on time. I was shocked to hear that. I rang up the energy company and spoke to the managing director, who said that his charges for those who do not pay by direct debit were actually some of the lowest.

We went through every single energy company and found that the average cost is about £114 a year if you do not pay by direct debit, and it goes up to £390; that is what one company was charging. A million people in our country do not have bank accounts, and 45% of people do not pay by direct debit, yet they are being fleeced by utility companies.

Some of those companies call that extra charge a discount, which in my view is like calling a mortuary a negative patient output. "Discount" is a weasel term, and we need to raise the issue in Parliament. That is why I have tabled the motion, which is supported by an enormous number of colleagues. It asks the Government to consider the matter and to examine the possibility of setting a cap on how much energy companies can charge if people do not pay by direct debit. I am sure that my colleagues would like to say something.

To read the representation in full go to: Transcript of Representations: TUESDAY 28 JANUARY 2014 (Scroll half way down)


About Backbench Business Debates:

The House of Commons Backbench Business Committee has a limited allocation of time outside Government control in which it can schedule subjects for debate suggested by backbench Members of Parliament.

The Committee can consider any subject for debate. This includes subjects raised in national or local campaigns, reports by select committees and other groups and issues suggested by constituents, including by people who have signed an e-petition or a traditional paper petition (there is no restriction on the number of signatures required).

To find out more about the work of the Backbench Business Committee visit their web pages at Backbench Business Committee


How to watch:

The Questions can be viewed on Parliament TV (Silverlight or Windows Media Player required to stream TV): Parliament TV Player

Transcripts of proceedings in the House of Commons Chamber are available three hours after they happen in Todays Commons Debates


* It may begin later if any Urgent Questions or Statements are granted on the day, as Parliamentary business is subject to change.


We hope this is of interest? We will post up further links when they become available

Thanks
DOT

UKParliament

Hi MSE'ers

For those who are interested we can now link to the transcript of yesterday's debate around energy bills with non-direct debit payments at House of Commons Hansard 4 February 2014

The recording of the debate is also still available for those who might be interested in watching at Parliament TV Player

Thanks
DOT

scaredofdebt

They need to be debating more important things like forcing the adoption of a daily standing charge - this is leading to the vulnerable having their gas meters removed and will cause deaths if we have a cold snap.

Some companies are charging more than 50p a day for the gas daily standing charge, if you are on a fixed income then £180 a year or so is a lot to pay before you even start using gas.

This has been instigated by Ofgem, so much for the regulator looking after the consumer.

Nada666

I am pretty sure the idiots saying "bwaah - show us the real costs" will simultaneously back-track when the real costs of prepayment meters are brought to play. Indeed, I am pretty sure some of them included prepayment customers in the same breath. Ridiculous.

(Please note I am one-hundred percent in favour of direct debit discounts being fairly applied - but this should only be done by revoking Ofgem's idiotic ban on prompt payment discounts - force companies to offer the same quarterly discounts and allow them to include them in quotes on comparison sites.)

Nada666

(And, Scaredofdebt, this will make the situation for those savaged by standing charges even worse - they currently have a modicum of choice through being able to choose between npower and Ebico. Remove npower's flat rate discount and Ebico is even more <ahem>ed)

Joyful

I have read through 2/3rds of this. Interesting that they want customer loyalty deals and perhaps a prompt payt discount- both things Ofgem have asked to remove. I also agree that the difference in sparks DD prices is astronomical but it has warped the debate. They should have mention the price difference of the other suppliers.

They mentioned 2 that charge no difference. Those are 2 that have low customer bases so do not have to pay some of the things the bigger suppliers pay for.

The biggie was the prepayment customers. Not sure how that can be made easier but educating people about budgeting through spring and summer to put money in the meters for winter should be a priority.

Also there was a mention of the government winter fuel allowance. It always amazes me how many people do not use it for their energy and then complain they cannot afford to heat their homes.

dastep

There is another argument that could be put forward in the House of Commons; that it is illegal for a company, who chooses to operate in the UK, where cash is still being used to pay for goods and services, to fine a citizen who chooses to use that method.

I currently read my own meter, receive my bill via email and pay my bill via a BACS transfer through my online bank account, but I am still punished with a non DD fee by my energy company, and I believe that it is illegal for any company to penalise anyone who chooses to use the legal currency of the land but who might not have access to a bank account, does not want a bank account or does not want to use electronic methods to pay their bill.

At the moment, it is still not 'customary' for everyone to use electronic payment processes when purchasing goods and services in the UK, and until such time as paper currency is totally eradicated from use, all companies have a legal obligation to provide cash payment services free of charge and without any duress to the customer.

My argument in a nutshell: It is hypocritical for the UK government to endorse the issue of paper currency which is protected by the legal tender laws while at the same time allowing companies to punish citizens through fees or charges who choose to use that method of payment.

Bluebirdman_of_Alcathays

dastep wrote: »

I hate direct debits and avoid them when possible.

The other day my energy company phoned to try and sell me direct debit versus my current way of paying telling me I would 'save money' with a DD.

I currently read my own meter, receive my bill via email and pay my bill via a BACS transfer via my online bank account, but I am still punished with a non DD fee. Unfair!

Those that have easy access to credit via a credit meter, yet haven't set up some guaranteed form of payment are a real risk to energy companies, and are indeed where most of the bad debt is generated.

Those that pay by DD say it's only "fair" that they get favourable terms for allowing the enegy company access to their bank account.

dastep

Bluebirdman,

There are two reasons why energy companies want you hooked up on direct debit:

1. Energy companies currently have around £2 Billion from direct debit surplus sitting in their bank accounts which earns around £36 million a year in interest.

2. Direct Debits reduce staff costs, paperwork costs and processing costs for the energy companies who don't have to process paper bills, cash and cheques.

Bark01

dastep wrote: »

Bluebirdman,

There are two reasons why energy companies want you hooked up on direct debit:

1. Energy companies currently have around £2 Billion from direct debit surplus sitting in their bank accounts which earns around £36 million a year in interest.

2. Direct Debits reduce staff costs, paperwork costs and processing costs for the energy companies who don't have to process paper bills, cash and cheques.

Bad debt on credit accounts outweighs both these benefits. your point 2 hardly amounts to anything in the grand scheme of things, I would imagine point 1 will be brought into a license condition in the next year or 2.

Once SMART meters roll out the industry will be pushing for in home prepayment to be the norm.

Bluebirdman_of_Alcathays

dastep wrote: »

Bluebirdman,

There are two reasons why energy companies want you hooked up on direct debit:

1. Energy companies currently have around £2 Billion from direct debit surplus sitting in their bank accounts which earns around £36 million a year in interest.

2. Direct Debits reduce staff costs, paperwork costs and processing costs for the energy companies who don't have to process paper bills, cash and cheques.

1. Centrica's cost of bad debt alone is over £36 million a year, never mind the rest of the industry.

2. Reducing staff and paperwork costs are a normal aspiration for any business, why should energy companies be any different?!

If you want to benefit from cheaper prices, pay on the terms the seller specifies. It's not rocket science, and it's something most people are familiar with, whether it's getting a lower price for cash with the tradesman, or getting an early booking discount on your package holiday to Benidorm.