Ruth explains why the prepayment meter price cap is insufficient
Ofgem’s Prepayment Price Cap Briefing Tuesday February 7th at 9.30am-10.30am
On Tuesday February 7th Ofgem announced the levels of pre-payment price cap which come into force on April 1st. The transitional price cap is being introduced following the Competition and Market Authority’s (CMA’S) two year investigation of the energy market. It will bring into effect the outrageous decision of the CMA to cap the extra toll on Prepayment customers by only around £75 a year – despite these customers, usually the worst-off, paying around £300 extra for the privilege of paying in advance.
Following the announcement, Fuel Poverty Action attended a briefing for stakeholders at Ofgem’s London office at 9 Millbank at 9:30am. FPA presented detailed evidence and devastating personal testimonies to the CMA last November[i]along with a tiny doll’s cap[ii] but they preferred to listen to the industry, which is now increasing prices yet again.
The energy companies’ licence conditions (SLC 27.2A)[iii] says any extra charge shall reflect real costs – yet real costs of prepayment meters were calculated by the CMA at £54, raised under pressure from the industry to £63. The extra paid by prepayment meter consumers is around £300, and decreasing it by £75 will not bring it down to £63. Suppliers will still take in an extra £160 profit per year from each prepayment customer. The licensing conditions are not being met.
The CMA’s Roger Witcomb says, “It is unacceptable that four million households on prepayment meters, many of them vulnerable, face higher bills than other energy customers”. [iv] Yet this is exactly what he has ordered.
Ruth London, from FPA says, “Thousands of people die every year because they cannot afford to heat their homes, and millions live in fear of the heating, lights, and fridge clicking off when a meter runs out. The CMA seem to be more concerned to promote competition than they are about people dying – and then they expect us to be grateful. Of course, every penny does count, but the reality is bitter for customers who cannot afford this blatant discrimination against those who have least to begin with.”
“When we wrote to the Prime Minister about this in November, the reply put forward switching and competition as a solution. It is now perfectly obvious that competition does not work to protect customers in the energy market, even for credit meter customers and still less here. The Prime Minister’s outraged words about an exploitative market and her autumn promises to take action on fuel bills that are “just not right” have so far led to nothing but more pain. This pathetic cap is no exception.“
[i] Here:https://assets.publishing.service.gov.uk/media/583ee057e5274a130700003c/prepayment_price_cap_draft_order_response_fuel_poverty_action.pdf
[ii] Photos here: https://drive.google.com/drive/folders/0B0qHcBpAhFaCVUQtcWwxS0RiYkk?usp=sharing
[iii] See Suppliers’ conditions at https://www.ofgem.gov.uk/licences-codes-and-standards/licences/licence-conditions
[iv] https://www.gov.uk/government/news/next-step-towards-300m-saving-for-prepayment-energy-customers