Prepayment meters to be charged at same rate as DD

Nelliegrace

I expect it means that those using Direct Debit will pay more, and not that other groups will pay less. Heads we win, tails you lose.

theoretica

A number of posters saying that the infrastructure of prepay has increased costs.  But how does that compare to the reduced risk of large bad debts?

Scot_39

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?

If the costs are different and the risks are different - why should they be priced the same.

BT for instance still charge customers £3 to produce, print and post out a paper bill if they want one.

The question is are the costs proportionate to the system, hardware, admin costs etc and the credit risk of the payment method.

A monthly DD will be a lower risk than a 3m paper bill  - for 3x the amount on a like for like basis - for instance.

Shops don't process top up transactions for nothing.

And the proposed equalization isn't based on actual cost to the industry - it's for now - purely a political decision - to subsidize the cost via the EPG scheme.

It is not saying there are not very real additional costs - it's just paying them from taxes - or rather debt.

And so once the EPG goes - if no other system in place - it will be DD and SC customers carrying it.

Scot_39

Sea_Shell said:

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?  

AFAIK Not - just PP and DD.

Given it's being left up to upto Ofgem apparently - to resolve the PP issue - don't expect it to favour users - the industry will get it's £££s - and users - other users will likely pay.

But only read the BBC article - not anything of real quality yet on it.

There's no pretence these meters aren't a different expense to administer. In fact theirs the explicit admission it's c£45 more expensive.

Scot_39

MattMattMattUK said:

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.

The unit rates are now maybe as cheap - there's no credit risk - so perhaps deservedly so.

But there is £31 on Gas and just under £20 Electric Standing Charge right now in first couple of Ofgem table regions - the BBC article says £45

https://www.ofgem.gov.uk/sites/default/files/2022-11/Default tariff cap level - 1 January 2023 - 31 March 2023.pdf

Scot_39

theoretica said:

A number of posters saying that the infrastructure of prepay has increased costs.  But how does that compare to the reduced risk of large bad debts?

The Ofgem tables will tell you what the industry thinks the net impact on cost are in terms of our prices.

But not the balance

You can dig into their detailed price make up spreadsheets - you might even find some of the specific answers.

Start e.g.

https://www.ofgem.gov.uk/publications/default-tariff-cap-level-1-january-2023-31-march-2023

I started - to look for something ages ago - and then just thought - is this worth it ?

Unless the numbers been subject to any independent auditing / critical review - your back at point 1 - I suspect just company numbers ?

wolvoman

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?

If you were to choose a more costly method of payment, why should someone choosing a less costly method have to pay the same?

If you’re forced perhaps makes sense, but not if you choose the higher cost method.

Scot_39

MattMattMattUK said:

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.

Not SC - around £50 ex VAT pa right now dual fuel

Scot_39

km1500 said:

1. pay on receipt - that is the normal tarrif

2. pay by monthly DD - normal tarrif is discounted by a few percent as an incentive

3. prepay - plan is to give the same discount as DD, funded by taxpayer.

So why do Ofgem list other payment (DD) first ?

And why does everyone talk about their DD price cap and the DD price based £2500/3000? EPG etc.

Think that's perhaps a sign that now in the 2020's

1) DD is now the normal default tariff

2) pay on receipt - standard credit - you pay more due to post, admin and credit risk.

3) PP - pay more SC simply because meters are more expensive, admin on top ups more expensive,

            but should arguably pay less per unit - as now - but not always - as NO credit risk.

            (and arguably a capital and therefore interest source)

Its the current c£50 on SC this change is targetting - for now and future taxpayers (oops net taxpayers - wouldn't want to be corrected again) - once Ofgem report - other users my guess.

Scot_39

bristolleedsfan said:

Sea_Shell said:

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?  

4 categories

Prepayment key and card
Smart Pre-Pay ( EDF offer lower night rates than DD for Eco7 )
Pay on receipt of bill

Pay by DD (fixed or variable)

Ofgem don't split the two forms of pre-pay into seperate pricing.

Wonder which one - or mix of ones - EDF use - and are you comparing only rates - or SC - or rates and SC.

You got a link ?

Be interesting to see ?