New Green Jack New Green Jack

46 responses to “The Pre Payment Meter Rip Off”

    • Susan Golden

      Delighted to hear this put so clearly- I have long thought that these are the best payers as they pay in advance. It should be illegal to penalise them for being poor when they are doing the right thing

        • Graham Brown

          Do we know what additional costs there are by offering a pre payment meter as against a direct debit??

            • Morten

              Hi Dale,
              Very interesting stats! Pre-payment meters are indeed a rip-off. Can you tell me the source of the stats? And what the extra costs are for people on pre-mayment meters? Is it solely higher tarriffs?

    • Chris

      I’m still choking on that line ‘30,000 expected to die this winter due to being unable to afford to heat their homes’. …And that off the back of annual bill increases of around 10% and a 75% surge in profits for the big six.

      What’s wrong with us?!

        • Joe V

          That’s easy Chris, the electorate vote for the wrong people. If they voted for the Green Party then we’d have ethics through all strands; energy, work, pay, travel etc.

          Everything starts with who you vote for and indeed if you can be bothered to vote. If garbage (politicians) get voted in, then we get garbage (policies) out.

    • Dave Jackson

      That is why till we switched our gas to get the dual fuel tariff we were with equigas. We had got rid of the pre-payment meter the previous owners of the property had by that time for electricity.

      Totally agree there is no justification for it though.

    • Helen Farmer

      “One of the biggest things this or the next government could do to alleviate fuel poverty is to end this practice – to forbid energy companies from discriminating against Pre Payment Meter customers in this way.

      It can be done – Ecotricity does it already”

      Another way would be to extend the Warm Home discount to all of those in fuel poverty, rather than just those ‘big 6’ customers on pension credit or low income disability benefits, as now.

      Ecotricity refuses to join this scheme, which would give it’s poorest customers £135 a year reduction in their fuel bills – quite a sum and one which lifts those who do qualify (because they are with one of the big 6) out of fuel poverty.

        • Dale Vince

          Hi Helen,

          Another way would be to extend the Warm Home discount to all of those in fuel poverty, rather than just those ‘big 6′ customers on pension credit or low income disability benefits, as now.

          You do realise that the Big Six have something like a 98% market share do you?

          Cheers.

            • Radderz

              98%!

              I knew it would be high, but that’s pretty amazingly high still; How do so many people worry about environmental issues, but so few actually do the basics like switching supplier which makes real front line differences?

              There will be a tipping point with this number where it will suddenly plummet, but my guess (based on market share of dominant tech companies/products) it won’t be until the 70% region.

              The seed has been sown now, as consumers have lost faith in the big 6, so I reckon we might witness this happen over the coming decade, truly exciting news if it does.

            • Helen

              “You do realise that the Big Six have something like a 98% market share do you?” Yes, i do. Which is why extending the scheme to include every household in fuel poverty, rather than just those who get pension credit or very specific low income disability beneifts would make a big difference. Likewise, smaller energy companies committing to honour the £135 a year discount to the minirity of fuel poor households who actually do currently qualify, in the same way that the big 6 do, would ENABLE the economically disavantaged to chose green enery suppliers rather than forcing them to stay with the big 6 or lose a discount equal to approx two weeks income.

                • Dale Vince

                  Hi Helen, the Big Six have no choice of course in paying this discount, it’s one of the ‘green levies’ that they were railing against last week – they do so reluctantly.

                  I’m not sure it makes sense for you to focus on the 2% market share that, for the most part, does not take part in the Warm Homes Discount – and skip completely over the 98% that is involved – where the Big Six give with one hand and take back with another.

                  Why are you silent on that issue and choosing only to focus on the WHD, and small suppliers.

                  Are you in the energy industry?

                  You raise another new issue, that of ‘economically disadvantaged’ households (not) being able to choose green energy – do you really think this is an issue of anything like the same import – as a £350 million rip off of the same households – and that’s just for brown energy?

                  And anyway the Big Six have green tariffs too you know.

                  Cheers.

                    • Helen

                      Dear Dale No, i’m not in the energy industry, i’m just a consumer. The reason i am focussing on this issue, is that the refusal of Ecotricity (and others) to sign up to the WHD is THE ONLY issue which prevents me (as a disabled person reliant on state benefits) from swithing to a green supplier.

                      The rip off of househiolds who use prepayment metres is another matter, and one which you do well to highlight. However, it is unfortunate that you have made the incorrect assumption that all such households are ‘economically disadvantaged’ ‘in fuel poverty’ and would all qualify for the WHD. They are not, and they don’t. I personally know three families who have PPM, one unemployed and two working, none of them qualify for the WHD. I also know dozens of people who are OAPs or disabled and qualify for the WHD, none of them are on PPM.

                        • Dale Vince

                          Hi Helen, Just to be clear we decided not to opt into the WHD, rather than refuse to sign up to it. It’s a bit different in the presentation.

                          We set out the reasons for that in our statement which you posted here. It would have cost all of our customers about £12 per year if we did this – and it would have provided very few of our customers with a discount. Our customers would have been subsidising discounts for the Big Six.

                          I can see that you are frustrated at not being able to buy green energy and have the WHD. But you seem to have overlooked the green tariffs that the Big Six offer, you could have opted for one of those.

                          And I think it’s a lot to ask that all of our customers pay £12 a year more so that you (and a small number of others) can have the WHD. Which you can get from the B6 anyway, and go green. Or at least you could have.

                          The world keeps moving on. I believe that none of the B6 offer a green tariff now to new customers, in anticipation of the new rules from OFGEM, coming in next year.

                          And WHD itself may be moved into general taxation – if that happens it should be available to all suppliers to pay without the penalty small suppliers were looking at.

                          Last thing – I’ve not conflated PPM meters with WHD customers – I think you have. They are quite different, though the customer groups affected will overlap.

                          I am pretty sure that there is also an overlap (and a big one) between PPM customers and those considered to be in fuel poverty.

                          Cheers.

    • Alan Lee

      What happened to the eithical part of the co-op tut tut..

    • Radderz

      It’s about time someone took a stand! I never understood how they could charge more for paying up front when these customers are least risk for the energy companies.

      Yes extra costs exist through the prepayment infrastructure, and fraudulent keys could add additional problems, but I’m sure if it prevents bad debts and cost of recovery from DD customers running up large bills, you would think this would be preferable?

      I guess it’s taking full advantage of an excuse to bill that bit extra.

    • Sorin Moroianu

      Crazy! :(((

    • Anthony Mills

      Helen Farmer said:”Ecotricity refuses to join this scheme [the Warm Homes Discount], which would give it’s poorest customers £135 a year reduction in their fuel bills – quite a sum and one which lifts those who do qualify (because they are with one of the big 6) out of fuel poverty” which you did not answer directly. Has Ecotricity refused to join the scheme, or been prevented from doing so, and if so, why, please? I would expect that you would have a good reason, or at least a reason, I’d just like it explained, rather than evaded, please.

        • Helen

          Anthony, ecotricty’s stance on the Warm Home Discount is here http://www.ecotricity.co.uk/customer-service/the-legal-stuff/warm-home-discount-scheme

          “The scheme has four key areas:

          Help for older customers on low incomes – on the Guarantee Credit element of the Pension Credit
          Help for low income and vulnerable households – who are fuel poor, or in a fuel poverty risk group
          Discounted/social tariffs and rebates for customers
          Programmes and partnerships to help people in, or at risk to, fuel poverty – offering a range of help including checks on people’s entitlement, debt advice and energy efficiency measures.

          Will we opt into the scheme?

          We could but having thought long and hard about it we’ve decided not to. Our reasoning is as follows:

          Participants (energy companies) have to pay into the scheme according to their market share and claim from the scheme according to the number of customers they have who qualify for the grants.

          In year one of the scheme, we estimate that it would have cost over almost £100,000 for Ecotricity to participate, rising to around £500,000 in year four – that’s nearly £900,000 in total over the four years. That’s not just a lot of money, it is far more than our customers would receive in Warm Home Discount Scheme payments, because of the make up of our customer base.”

          Since Ecotricity (and ALL the other small energy providers) choose not to opt into the scheme, those unfortunate enough to become poor and old/disabled cannot afford to switch to Green Energy.

          Purpetuating the reality, as well as the idea, that ‘Going Green’ is only for those with money to spare.
          Absurd.

            • Dale Vince

              Hi Helen, Good to see you’ve found our public stance on this issue.

              I think however that it is your stance which is absurd.

              You continue to try and conflate the 2% market share of the small suppliers and their stance on the Warm Home Discount – with the £350 million rip off of those with the 98% market share – an issue that you remain (strangely) silent on.

              Equally absurd is to try and introduce this idea that there is no choice to go green for lower income households – overlooking the green tariffs that the 98% market share holders offer – and overlooking the fact that for Pre Payment Meter customers it is now cheaper to be green, with ecotricity, than be brown in most cases in most regions – due to our ethical pricing policy which has made us the popular choice for PPM on Uswitch this last week or three.

              There is a choice and people are taking it.

              Cheers.

                • Helen

                  Dale, i was sent a link to this forum by a good friend who is an ecotricity customer, and who was trying to recruit me as a customer to your company. Presumably this page was highlighted to show Ecotricity’s social credentials, as the issue of the rip off of disadvantage people is something i have campaigned against for years.

                  I apologies for not explicitly stating my objection to the PPM rip off, but it kind of goes without saying, don’t you think?

                  I do not see why you feel it is ‘absurd’ to highlight the FACT that there is no choice to go green for lower income households. The big 6 may offer green tarrifs, but they cost more. For people like myself who qualify for the WHD, smaller suppliers refusal to join the scheme, makes it impossible to switch.

                  If, like me, you have a very low income AND high energy usage (due to needing to keep the heating on all day) cost is the primary driver in decision making – how could it not be?

                  I personally would be prepared to pay a slightly higher unit price for TRUELY green energy, but cannot afford to lose £135 a year on top.

                  Obviously, the majority of the population are not in my situation, and could easily afford to move to a green energy supplier. I find it suprising that only 2% of the population choses to do so, I do not know why the majority don’t.

                  People who have PPM are unlikely to qualify for WHD (as to do so someone must be in receipt of either pension credit, or both a low income benefit and either Disability Living Allowance or have a child under 5).

                  They are however people who (whether currently ‘fuel poor’ or not) have had difficulty paying their gas/electricity bills in the past, or who are unfortunate enough to live in private rented or social housing where previous tenants have.

                  If these households are able to switch to Ecotricity and save money this should be advertised widely, perhaps via CAB etc. however, given that many have debt with thier existing supplier, it is unlikely to be possible.

                    • Dale Vince

                      Hi Helen, thanks for the explanation.

                      To explain myself, I felt it wrong to describe non participation in the WHD scheme as ‘absurd’ and also wrong to claim that going green was only for those with money to spare. I felt that was more deserving of the term ‘absurd’.

                      For two reasons – participation in the WHD comes at a very big cost to small suppliers, out of proportion to it’s benefits in our estimation. And of course the WHD is widely available, and from companies with green tariffs (although they are closed now).

                      And secondly because our PPM tariff is now the cheapest in the market in 7 out of 14 regions (half the country) – there is a real choice for low income households to go green – and save money!

                      I’m not an expert on WHD – but here are some 4 million homes in Britain with a Pre Payment Meter and they will be among the least well off in the country – most of them 99%+ are being ripped off.

                      And only 10% of them are in debt by the way – that’s probably less than the general population that pays by other means.

                      Cheers.

                        • Ms Vanilla Rose

                          Sorry, Dale, are you actually arguing that you would prefer low income customers to choose the Green Tariff options of the “Big Six” than join Ecotricity?

                            • Dale Vince

                              Hi Vanilla, nope that’s not it, but I can understand it’s got a little confusing.

                              Helen introduced the issue of Warm Home Discounts and complained that she was unable to go green and have this discount. I was pointing out that this was untrue, the option did exist to do both, through the Big Six.

                              It’s clouded the issue here – of the pre payment meter rip off.

                              It’s perhaps worth knowing that the world has moved on very recently – none of the Big Six now offer a green tariff to new customers, and the WHD looks like it’s being moved into general taxation – if it does then it will be available for large and small suppliers equally.

                              The point of my post was to highlight the rip off of low income customers by the Big Six. And ironically perhaps, the best option now for people with pre payment meters is a green option.

                              Since our price freeze and the price rises of the Big Six, ecotricity has become the cheapest tariff option for PPMs in half of the country, and very close to it in the rest of the country.

                              So no, I wasn’t advocating a move to the Big Six, but I was pointing out that Helen was wrong to claim she had no option to go green and get the WHD.

                              Hope that makes sense..:)

                              Cheers.

        • Dale Vince

          Hi Anthony, I’m curious as to why you would join this debate, and like Helen, skip completely over the information in my post – the £350 million rip off of less well off households – and instead be so interested in the Warm Home Discount scheme. And make like it is the big issue.

          That’s quite an unusual position (other than Helen also adopts it). Do you have an affiliation in the energy industry?

          Cheers.

    • Anthony Mills

      Thanks for that… I ought to say that’ll teach me to actually read what’s on the website before launching into unwaranted criticism and causing by my ignorance the unnecessary use of your time to reiterate the facts. And I agree with your reasoning and position. Thanks for restating them.

        • Dale Vince

          Hi Anthony, so now that is cleared up for you, and Helen – what are your views on this £350 million rip off of Pre Payment Mater customers…?

          Or are you evading this issue…:)

          Cheers.

            • Helen

              Helen – what are your views on this £350 million rip off of Pre Payment Mater customers…?

              Or are you evading this issue…:)

              Dale – I view the Prepayment Meter System as the very worst of the myriad ways in which poverty is penalised by ‘the system’, since they force the stark and immediate choice between heating and eating (because the people concerned do not have enough money to do both). Many will be on a PPM because previously (with a standard meter), they made the ‘wrong’ choice.

              I’ve taken the time to do tome research into this issue and have discovered that:

              The additioal costs accociated with a PPM (other than where debt is being recovered by the PPM) are wholely due to not receiving Direct Debit discounts. Those on PPM pay exactly the same rate as anyone who either choses, or is forced to pay by anything other than monthly direct debit, including those who have quarterly bills. A sucessfulcampaign by the National Housing Federation stopped the practice of charging higher than standard rates to PPM users, several years ago. http://www.housing.org.uk/get-involved/past-campaigns/ending-the-prepay-meter-rip-of

              So really where Ecotricity differs from other energy suppliers is that it does is NOT offer Direct Debit discounts.

              Those on PPM are not actually the same group likely to die of cold this winter. The 30,000 figure quoted in the article is not referenced, but seems to be derived from an estimate of the number of extra winter deaths expected; the vast majority of which are of people over 75. (If this is incorrect, please explain where the figure comes from). The 2010 Marmot review found that less than a quarter of all additional winter deaths were directly attributable to lower indoor temperatures in homes.

              Those who pay for their energy on reciept of a quarterly bill also lose out on Direct Debit discounts. These customers ARE likely to be older people (who have always paid this way), so actually are more likely to be in the group at risk of dying this winter.

              I wonder why the article chose to highlight one group rather than the other.

                • Dale Vince

                  Hi Helen, you are absolutely wrong on this.

                  The average extra cost being paid by PPM customers is £85 or so. The typical Direct Debit discount is far less.

                  I don’t know where you got this info but it’s wrong – possibly it’s simply out of date. The practice of charging more for PPM is alive and well.

                  If you instead do your research on switching sites today, as we have, and compare actual prices being charged now to PPM customers compared to Direct debit – you will find our numbers are correct.

                  The 30,000 deaths article I referred to was in the Guardian online.

                  http://www.theguardian.com/uk-news/2013/nov/26/winter-deaths-rose-third

                  It refers to the latest figures from the Office of National Statistics and comments from Age UK and others, blaming energy prices.

                  You are also wrong to continue to suggest that those on Pre Payment Meters are not likely to be those that struggle to pay bills or qualify for WHD, or indeed who may be at risk this winter. That makes no sense at all. Being on a Pre Payment Meter is not a lifestyle choice.

                  Cheers.

                    • Helen

                      Dear Dale
                      The direct debit discount I recieve as a duel fuel customer with SSE is £92 a year.

                        • Dale Vince

                          Hi Helen, I seriously doubt that this is correct.

                          And you’ve not addressed the other issues in your previous post, which I believe are also incorrect – like your proposition that the only difference in price is the Direct Debit discount and this (PPM rip off) practice was stopped several years ago.

                          Wildly inaccurate things to say. You really should look properly into these things before making such claims.

                          Cheers.

                            • Alan Lee

                              Hi Helen,

                              Listen to what Dale says, ecotricity are doing the best they can. They have small market share can’t effort to do WHD, although this looks like it will be going to taxation, which is the right place for it. With the big six taking away green energy option, I for one will be going to ecotricity at the end of my fixed deal, ecotricity have major ethics and have priced themselves with big six, which I find amazing with such a small market share, profits must be cut to the bones.

                              Well done Dale in making green energy affordable and available to the average consumer. We have to go green, this planet is dying, this I believe to be fact! We have to live here our children have to live here, it people like Dale should be held up high that ethics come higher than profit and greed. A few business people with this ethos and I find anything I would crucify him over.

                              Well done Dale, all your work is paying off!! I can see ecotricity being no1 energy company in ten years time. Not just for works but for the amount of customers you have on the books.

                              All the best

                              Alan

    • anthony mills

      Ist, my only connection to the energy industry is as a volunteer with the Friends group working in our local wood converting arisings from our work into firewood which is provided locally for donations which then fund our activities. 2nd, as a tenant member of our Housing association committee, over half of whose tenants are on Housing Benefit, I am more aware than I want to be of poverty including fuel poverty. Of course it is outrageously immoral and disgustingly exploitative that the poorest and most vulnerable have to pay more for their energy than those better off. “Those that have shall get and those that have not shall lose”, that is how the system is rigged and that is what society needs to constantly redress. What I did not understand, being ignorant of the financial mechanisms involved, is why Ecotricity could not assist people in the way that the “Big 6” can. It seemed anomalous and unjust. You have explained and demonstrated that it is yet another way and further evidence of how the system is weighted and biased against small progressive green suppliers. I apologise for the word “evade”, I just couldn’t see in your response the answer I wanted that you later referred me to. Please be assured that you and Ecotricity have my whole hearted support, indeed I evangelise the virtues of Ecotricity wherever I can , share your Facebook posts, invest our savings in your bonds and cannot understand why people can’t see the obvious benefits and inevitablity of a carbon free future, such as you are striving to provide. All power to your elbow.

        • Dale Vince

          Hi Anthony, thanks for explaining.

          I clearly misunderstood where you were coming from, my apologies for that.

          Cheers.

    • Colin Holman

      When will we see a cheap-ish electric ‘Volk Wagen’ for the ‘poor’ masses???

    • Thomas Lankester

      Hi Dale

      Good to see ecotricity commitment to avoiding the pre-pay rip off.

      Unfortunately we have been caught (unawares) by another issue – introduction of standing charges. Hidden behind the promise of freezing bills to April 2014 was a 26p gas standing charge change to our ecotricity gas bill.

      We did not budget for that when we switched from gas to ASHP heating last year, thinking we were doing our bit with renewable heat off the back of 100% renewable electricity.

      In fact we’re ending up with almost £100pa extra on our gas bill. To put it another way, a 7x increase in our per kWh rate from 7.78p to north of 55p.

      I accept the principle of paying fair dues for access to the national gas network, after all someone is responsible for keeping us connected and responding to any leaks. BUT most of the upkeep costs for the national gas network are in the central infrastructure and surely that should be paid for pro-rata on usage i.e. the fraction of the national gas handling costs associated with our miniscule (200kWh) usage. Anything else is basically a poll tax.

      We (me, the wife and our friends at Transition Town Farnham) would be interested in your take on this issue.

      Tom

        • Joe V

          I find myself in the same situation, being a low consumer of both gas and electricity. The introduction of the standing charge is a ‘one size fits all’ blunt instrument to increase payment to the infrastructure companies.

          I gather that the government introduced this and all the supply companies were obliged to implement it.

          It goes back to what I always repeat; if garbage (politicians) are voted in then we get garbage (policies) out. This country needs to vote for an ethical party and not one that supports its obscenely rich Eton buddies.

            • Thomas Lankester

              Hi Joe,

              Yes the government did it to, bizarrely, make it easier to compare, switch and save money. Epic fail for us then. The payback on our new heating system just went negative.

              It is not quite so simple when you dig a bit deeper. I found that the rate of standing charge varies. nPower have a 47p per day rate whilst GreenStar Energy is at 21.5p per day for their variable tariff. There must be a degree of company discretion then but the underlying ‘poll tax’ principle seems to be the government’s.

                • Justin Needham

                  I’ll weigh in also with Thomas on this one. I’m not quite in the same league, but striving to keep bills down, I got a 4 bed house through 2012-13 comfortably for £262 annual gas bill, and now with the new standing charge I am looking at a whopping 42% increase.

    • Justin Needham

      And have we any reflection of how the likes of Ebico achieve zero standing charge? – Presumably with higher unit prices, but it’s a better deal for the low user.

      Might Ecotricity consider this, or would that fall outside OFGEM’s new policy (too many alternatives)?

        • Dale Vince

          Hi Justin, I’ve not looked at Ebicos unit rate – but generally you would expect any tariff without a standing charge to have a higher unit rate, in order to recover the standing charges that way.

          The unit rate will be calculated to cover the standing charges at a certain level of consumption (per annum) – an average of some kind. For users below that threshold there will be a saving, an avoided standing charge. But for users above that threshold it will cost more.

          There’s no ‘one size fits all equally’ tariff as there will always be exceptions, the very low users who have either stopped using gas but like to keep a connection or who have taken measures such as Thomas. But these are exceptions.

          In general I think the standing charge plus flat unit rate is the most equitable tariff structure. Exceptionally low users will find an advantage in a higher flat rate but no standing charge tariff – at the expense of their energy supplier.

          Cheers.

    • ALEX

      Good valid points over the prepayment rip off. I’ve raised the issue our end and we will have to see what gets done but with the merger of npower and E.on in the pipeline I’m sure it won’t be addressed any time soon.