Prepayment meter customers should not be charged a premium

Prepayment meter customers have had a raw deal so far, but that must end with the arrival of smart meters, says Dhara Vyas.

Energy suppliers are often quick to remind us that most prepayment customers like their prepayment meter, preferring to pay in advance for their electri­city and gas.

Citizens Advice does not dispute that. Its research has shown that most consumers prefer paying for energy in advance this way, because it helps them to budget and reduces the risk of building up debt. We also know that most existing prepay meter users are not using their meter to repay a debt. So why are we concerned about prepay customers?

As the statutory consumer watchdog for energy customers, Citizens Advice has been campaigning for fair play for prepay users, and asking energy companies to improve the service and offer for consumers who choose to pay in advance for energy. Despite paying on average £80 a year more than direct debit customers, prepay users get a second class service, including:

•    limited top-up options;

•    little or no choice of tariffs;

•    faulty keys or meters;

•    poor customer service.

Our campaign focuses on three key areas, calling for the prepay meter market to give consumers a better price; more control; and easier use.

We know that the numbers of prepay meters is rising: 600,000 were installed in 2013, the vast majority to repay debts. Falling incomes and rising prices mean that the group of consumers self-disconnecting due to constrained incomes might have grown.

Citizens Advice is concerned that there is an impending crisis of affordability. If a customer cannot afford to top up their meter, they are faced with no choice other than to curtail, self-ration or self-disconnect their supply, which has a significant impact on the health and wellbeing of everyone in the home.

While price and affordability are key, there is so much more that energy suppliers can and should be doing. We are calling for them to offer at least two prepay tariffs and give prepay meter customers the opportunity to manage their accounts online. Suppliers should consider how they can offer online top ups (for example, through a dongle) and give consumers a range of ways to contact them.

There should also be mechanisms in place to ensure prepayment remains safe and suitable for the most vulnerable – for example, ensuring there is regular contact by phone, email and post with these consumers.

Citizens Advice is asking suppliers to consider whether they can introduce winter debt repayment holidays for certain vulnerable households and enhanced monitoring to identify and support consumers who frequently self-disconnect.

Smart meters offer an opportunity to improve service for those who prepay. The rollout should be a revolution, not evolution, for prepay users. Products and processes in a smart world will potentially change substantially: Smart Energy GB recently published research that claimed 48 per cent of the British population are interested in using a smart meter operating in pay-as-you-go mode. It is essential that these consumers get a fair deal. The future for prepay customers should include enhanced protections and a customer service experience comparable to that of credit consumers. They should not be the last to benefit from smart meters.

In a smart meter world we expect suppliers to ensure that prepayment tariffs are no more expensive than the supplier’s cheapest tariff, that there are an equal amount of pay-as-you-go tariff options as other payment methods, that consumers have free access to near real-time electricity use, and access to their account information. Smart meters promise to be easier to use, and switching meter modes between credit and prepay should be quick and convenient, with free low-credit alerts for pay-as-you-go consumers.

Citizens Advice has had some constructive discussions with energy suppliers and is optimistic about the changes and improvements that many of them have committed to. Pay-as-you-go energy should not be an option of last resort or a payment method that stigmatises people – it should be an attractive, viable and modern option for all.

Dhara Vyas, energy retail policy manager, Citizens Advice