1.4 million people living in homes that cut off their energy supply – warns Consumer Focus

1.4 million people living in homes that cut off their energy supply – warns Consumer Focus
Consumer Focus
29.07.10

New report finds:

1.4m people living in homes that cut off their energy supply
Half of households disconnecting include someone with an illness or disability
Two in five are home to children under 16

Consumer Focus is today calling on energy suppliers to transform the experience of the 8.8m people who rely on pre-pay meters. The call comes as the biggest ever study of pre-payment meter (PPM) energy customers1 is published by the consumer champion. It shows that around one in six pre-pay households, or up to 1.4m people, are living in homes that have cut off their own energy supply in the last year.2    The new findings are particularly worrying as almost half of households that disconnect their energy are home to someone with an illness or disability, and two in five are home to children under 16.3  Furthermore, almost half of people who cut themselves off say it happens more in winter, when people most need to keep themselves warm.
 
As it publishes its new report ‘Cutting Back, Cutting Down, Cutting Off’, Consumer Focus has invited energy suppliers to come together with the consumer champion to tackle the issues raised in the report and make pre-pay energy more affordable and convenient.

Mike O’Connor CBE, Chief Executive of Consumer Focus, said:

“Many customers like pre-payment meters because it gives them control over their budget, even though it means they pay more for their energy. Even though some people choose not to top up their meter, we must be concerned that hundreds of thousands of vulnerable consumers are walking a tightrope between topping up their energy to stay warm or buying a decent meal.

“Paying for a service in advance shouldn’t mean getting a second class service. Energy firms could transform the experience of customers by bringing pre-payment meters into the 21st century, making it easier to top-up and avoid being cut-off.”

Almost three in five pre-pay customers who cut off their supply say they have not had enough money to top up.4 Three quarters of households that disconnect are already cutting back on things like food and leisure or cutting their energy use so they can afford credit. For many, a necessary part of any real solution will be access to decent price support and energy efficiency measures. This requires action from the Government and others.

Despite so many customers having to resort to cutting off their energy in order to manage their finances, half of pre-payment meter customers are either satisfied or very satisfied with their meter. Two thirds say this is because it helps them to manage their finances. Yet many people find the current system of having to buy credit for their meter at a shop or post office inconvenient. Around one in seven who disconnect have been unable to top-up their energy as the place they buy credit was shut or they couldn’t get there. Awkwardly placed meters can also make it difficult for people to top-up their meters and check on their credit-levels.

To bring pre-pay meters into the 21st Century and help those who are cutting off their energy, Consumer Focus will work with energy suppliers to:

1)      Improve pre-payment meters: Consumer Focus wants energy companies to make it easier for people to top up their energy credit by introducing online, ATM and text message top up facilities, as well as a pre-pay facility in smart-meters. It also wants suppliers to provide better checks for vulnerable consumers before meters are installed and guarantee that even if people run out of credit, their electricity will not be cut off at night or at the weekend.

2)      Make energy more affordable for vulnerable households: Consumer Focus wants discounted tariffs to be extended to all pensioners who receive pension credit, families with young children who receive means tested benefits and all people eligible for Cold Weather Payments. Introducing a pre-pay facility to all smart meters would also reduce the extra £81 pre-pay customers currently pay per year, on average, compared to monthly direct debit customers.

3)      Get better help for people to cut their energy use: Consumer Focus wants existing energy efficiency schemes to be better targeted on the most vulnerable consumers who often live in the coldest homes, which leak most heat. It also wants the Government to clarify future funding for Warm Front and its equivalent in Scotland, the only efficiency schemes targeted exclusively at vulnerable households.

Factfile:

Around one in eight UK households (13 per cent) has either a gas or electricity pre-payment meter – 3.7m customers have an electricity PPM, 2.5m have a gas PPM.

The average annual bill for a pre-payment meter customer on dual fuel is £1,175 compared to £1,094 for monthly direct debit.