Prepayment meters to be charged at same rate as DD

km1500

https://www.theguardian.com/money/2023/mar/11/extra-costs-for-customers-on-prepayment-meters-to-be-scrapped-in-budget

victor2

Or you could say those paying by DD will pay the same as those with prepayment meters...

MattMattMattUK

victor2 said:

Or you could say those paying by DD will pay the same as those with prepayment meters...

Exactly, this means prepayment electricity costs will rise not fall.

Alnat1

Sounds unfair that those who choose to pay on receipt of bill will be the only ones paying more.

Is it time to change the system so everyone is charged the same rates no matter how they choose to pay?

MattMattMattUK

Alnat1 said:

Sounds unfair that those who choose to pay on receipt of bill will be the only ones paying more.

Is it time to change the system so everyone is charged the same rates no matter how they choose to pay?

Personally I think not, people should be charged according to the cost of their chosen payment method, it should not be cross subsidised.

EssexHebridean

The media are going to dress this up as a good thing aren’t they - when for hundreds of thousands of prepay electricity users it’ll be anything but…then that will be the next “scandal” no doubt. 

superkoopauk

I don't really understand this.  There are additional costs to serve for PPM meters so how is paying for those clearly unfair?  As others point out the same principles apply to non DD payers so why aren't they being catered for?

There might be a case for smart PPM meters to have a different cap level  to traditional PPM meters as the infrastructure costs are lower (but not zero) on PPM smart

How could this change be achieved in the current Ofgem cap model?  Assumedly the PPM costs currently assigned to those meters will be proportionally spread over the other payment types.  Therefore DD customers will pay more and overall people will be worse off.  It just doesn't seem right to me 

Also as this will be effective from July at a lower price cap level so I don't see why people are saying PPM electricity prices will go up.  What am I missing?   

superkoopauk

Actually just noticed this from the article.  Hmm are taxpayers subsidising this rather than energy customers on other payment types?

The Treasury estimates the change will cost the taxpayer £200m.

EssexHebridean

superkoopauk said:

I don't really understand this.  There are additional costs to serve for PPM meters so how is paying for those clearly unfair?  As others point out the same principles apply to non DD payers so why aren't they being catered for?

There might be a case for smart PPM meters to have a different cap level  to traditional PPM meters as the infrastructure costs are lower (but not zero) on PPM smart

How could this change be achieved in the current Ofgem cap model?  Assumedly the PPM costs currently assigned to those meters will be proportionally spread over the other payment types.  Therefore DD customers will pay more and overall people will be worse off.  It just doesn't seem right to me 

Also as this will be effective from July at a lower price cap level so I don't see why people are saying PPM electricity prices will go up.  What am I missing?   

1st BiB - many on prepay don’t have a choice, while all those paying on receipt of bill - barring perhaps the tiny minority who don’t have a bank account - can choose DD instead. 

2nd BiB - in many regions electricity unit rates are cheaper on prepay. The SC will be higher, but as long as you use above a handful of units a day, you’ll still be saving. In my region (Eastern) people on E7 have voluntarily switched to PP with EDF to get the benefit of the far cheaper rate. 

ETA - that *could* change with the new price cap, but the generally lower unit rates have been the same in a lot of areas for a few cap periods now so far as I am aware. 

matelodave

Can people not actually understand the principle, It's not that Prepay or Pay on Receipt pay more ,its that those on a DD get a discount.

People who pay on recieipt of their bill effectively get free credit and anyone who pays by other methods get a discount. 

Those who prepay, get less of a discount as there are additional charges to enable prepay to work (including I guess a commission to those outlets that provide meter top-up facilities) Perhaps the answer there is to crank up the standing charge for pre-pay meters to offset the additonal collection charges and then give them the same discount as DD customers on their consumption.

However those who pay by DD quite often pay well in advance and as its by far the cheapest way for the supplier to collect their payments, its those on DD who get the better discount.

TBH if theres no discount advantage in paying by DD then I can't cant see the point as again we'll all be subsidising those who choose not to

Sea_Shell

Are there 3 categories of rates at the moment...?

Prepay meters
Pay on receipt of bill

Pay by DD (fixed or variable)


Is the plan to level out all 3 methods?