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Ofgem says prepayment customers must have level playing field

Ofgem has called on all energy suppliers to treat prepayment meter (PPM) customers fairly, following a review that found disparity in the treatment they were receiving.

The watchdog identified that around 60% of suppliers do not charge for PPM installations and 95% of meter removals were carried out for free.

However, suppliers who do charge demand up to £180 and £160 for installing and removing PPMs respectively.

It also found that over 40% of suppliers do not charge security deposits when customers wish to pay by standard credit or direct debit, but for those who do the average cost for consumers is £211.

Ofgem will now work with suppliers to abolish installation and removal charges ahead of an autumn consultation, as these costs can put many people off switching. Removing these barriers could help consumers save up to £300 a year if they switch payment methods from PPM to direct debit.

It will also consult on strengthening consumer protections over security deposits to either put an end to their use or, if they are appropriate, provide clearer guidelines for suppliers.

The regulator said it was committed to helping those consumers who can’t switch or do not wish to switch from a prepayment meter. More suppliers than ever are offering PPM tariffs, but there is limited choice compared with direct debit and standard credit.

Some suppliers identified technical barriers to lack of tariff choice for PPM customers, and Ofgem is investigating this to help consumers access more competitively-priced energy.

Partner Philip Cullum said: “Ofgem is concerned that charges and costs for using a PPM fall on those least able to afford them. That’s why we want to remove barriers, deliver greater protections and offer more choice for prepayment customers to ensure they’re able to find the best possible deals. We are calling on suppliers to work with us to abolish charges as soon as possible.”

“There are already good savings to be found in the energy market. Consumers can save up to £300 when switching from PPM to direct debit. Those looking for independent advice on shopping around should visit Ofgem’s Be an Energy Shopper website.”

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