Forced onto Pre-payment by Debt Relief Order

HoudiniFeel

My friend recently got a debt relief order because of the break-up of her marriage, the cost of moving to her own rented accommodation with nothing by way of furniture etc and the fact that she can only get a job offering £30 per week on a low wage. When she moved in she set up a direct debit with NPower who told her £60 per month would cover her needs. 8 months later they told her she owed them £1,600. After arguing her case for 4 months NPower admitted it had got the figures wrong and reduced the 'arrears' to about £700. She told them she was applying for a DRO and wanted to adjust her Direct debit to make sure it actually was enough to cover what she used so they agreed to increase the monthly DD to £120. In December the DRO went through. Now she has had a letter from NPower telling her that she will either need to pay an advance of 19.5 weeks or have a Pre-payment meter installed. She obviously cannot afford to pay a huge lump-sum in advance and it looks like she will have to pay the maximum cost for her energy despite the fact that she has never defaulted on a direct debit payment at any stage since she moved in. How can it be right that the poorest and most vulnerable can be penalised by the energy companies like this and is there anything she can do to avoid going to pre-payment?

tberry6686

It makes complete sense to me. Using a normal DD account would run the risk of being in debt to the electric company and would probably require credit scoring which with a debt relief order would probably be failed.
If it was your company would you allow credit to someone who had to have a debt relief order, I certainly wouldn't.

Bluebirdman_of_Alcathays

If your figures are correct, for the first 8 months of her tenancy your friend was using a whopping £147.50 a month of energy.

Whilst npower clearly haven't covered themselves in glory by setting the payment so low (ad nauseam)(£60 a month is unlikely to cover anyone), your friend should have taken some responsibility herself - if you are only paying £60 a month you should try and only use that amount.

In effect she was using well over double that, and npower didn't force her to do that.

PPM's are not the end of the world, they are no more expensive than paying when you get the bill. They are perfect for people who can't budget effectively, which is obviously the case as she has a DRO.

HoudiniFeel

Just a couple of points here. Firstly, she is in rented property where the only heating is storage heaters. She has no option to change them: that is the landlord's decision. Also, the house is not well insulated and does not have cavity walls and so eats up the heat. Secondly, as the first few bills she received were based on estimated readings she had no idea she was using more than she was being charged for and budgeted accordingly. Thirdly, the finally agreed sum of £700 covered January to December because the dispute over the amount ran from August to December so she was actually using the equivalent to £120 per month which she asked NPower to increase her direct debit to. I understand that the energy companies need to take care that people with DROs don't get behind with their bills but it seems a very strange and unfair way to operate to actually increase the amount someone in hardship has to pay for their electricity and increase the likelihood that they will not be able to pay to heat their home. Bear in mind this is someone who has been forced into debt by circumstance not someone sponging off the state. I would have thought carrying on with the agreed direct debits unless she defaulted on a payment would have been much fairer. I also don't understand the point about Pre-payment meters being no more expensive given that that's not what people like Citizen's Advice say on their site.

Bluebirdman_of_Alcathays

The insulation is a sad sign of the times, but it isn't any concern of npower.

Even if it's "only" £120 a month she's been using, it's still double what she was paying. Credit is a privelege, not a right, and if she had a DRO she should have paid particular care to ensure she was meeting her obligations.

The citizens advice website says "you'll usually pay more" than if you had a credit meter. Unless they have up to date information on how many people are paying DD, they can't possibly know that. My original point remains; PPM's are no more expensive than paying when the bill arrives.

honeybean

Am sorry but I also was in a nasty divorce and moved into a flat and had to furnish a 2 bed flat from scratch not even a tea spoon how did she use so much fuel ,my monthly bills for gas and elec is about £70 ,I have the heating when I am cold,all bulbs are low energy. Why did she not do meter readings I never pay a bill on estimates always read the meters. It is better she has a meter so she can get her head above water they are not bad things . Sadly she used the fuel so she owes it no two ways she will have to get used to it.

chanz4

DRO = credit decline, the energy company has to protect themself.

t0rt0ise

Bluebirdman_of_Alcathays wrote: »

The citizens advice website says "you'll usually pay more" than if you had a credit meter. Unless they have up to date information on how many people are paying DD, they can't possibly know that. My original point remains; PPM's are no more expensive than paying when the bill arrives.

This is disingenuous. The OP said they were paying by DD and not 'when the bill arrives' so of course the PPM will be more expensive. There are always cheaper deals to be had for credit meter users. The PPM users lose out.

chanz4

t0rt0ise wrote: »

This is disingenuous. The OP said they were paying by DD and not 'when the bill arrives' so of course the PPM will be more expensive. There are always cheaper deals to be had for credit meter users. The PPM users lose out.

The op may not be on a fixed tariff, and still be on dd. They also pose a high risk to suppliers now.

Bluebirdman_of_Alcathays

t0rt0ise wrote: »

This is disingenuous. The OP said they were paying by DD and not 'when the bill arrives' so of course the PPM will be more expensive. There are always cheaper deals to be had for credit meter users. The PPM users lose out.

Disingenuous? Probably, I will concede that. Inaccurate? Not at all. There is still a myth out there that paying by PPM is more expensive than any other payment method, and it isn't true.

PPM users do lose out, I agree. However, with credit comes responsibility - having an initial DD set too low does not mean a £700 debt in less than a year is inevitable imho. It takes less than 5 minutes to read a meter and check your account is in order.

Nada666

Bluebirdman_of_Alcathays wrote: »

Disingenuous? Probably, I will concede that. Inaccurate? Not at all. There is still a myth out there that paying by PPM is more expensive than any other payment method, and it isn't true.

Yep, because that is the myth. A straw-man large enough for any laird of Summer Isle to be proud of.

Please cite one single example.