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The Competition and Markets Authority is urging utilities to act on findings that prepayment customers are “prevented from engaging fully with the market”.
The CMA has found that technical limitations of prepayment meters limit suppliers’ ability to innovate and offer suitable tariffs to these customers. Their latest publication states that prepayment meters “give rise to a number of detrimental effects on customers”, who face higher costs than those on other tariffs.
These findings have prompted the new proposals which include facilitating the sharing of customer data.
Under the CMA’s plans, suppliers should disclose the details of any non-smart prepayment meter (PPM) customers to Ofgem and provide an opportunity for the customers to opt out sharing their data. Any customers who do not opt out would be entered onto a secure database by Ofgem where their data could be accessed by other suppliers. Suppliers and new entrants may then be encouraged to compete for PPM customers. This process could occur annually, the CMA has suggested.
Similarly, the CMA could require suppliers to provide annual notifications to prepayment meter customers “setting out their right to switch and highlighting any potential restrictions or charges that may be payable”. Customers would then have all the information they need to confidently initiate a switch, the CMA argued.
Other remedies include prohibiting a security deposit charge when a customer is not in debt or has incurred any charges for late payment in the last six months – addressing the current lack of clarity surrounding these charges.
Suppliers could also be prohibited from charging customers upfront for the cost of a new meter when switching from prepayment and a transitional ‘safeguard price cap’ could be put in place for customers which would protect those who could not switch away from a prepayment meter – possibly in the form of a maximum annual bill.
Previous measures, such as the prioritising of prepayment meter customers for smart meters have not all been well-received by the industry, as reported by Utility Week in September.
The CMA’s provisional remedies for the wider investigation will be published in January.
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