Ofgem warns prepayment hikes energy bills

29 June 2007
Customers who pay energy bills using a prepayment meter are spending £100 more on average than their direct debit counterparts, energy regulator Ofgem has revealed.

British Gas was the most expensive for customers paying for gas with a prepayment meter, levying average annual bills of £617, Ofgem revealed, while npower was most expensive for electricity, charging £435 annually on average.

By contrast, Scottish and Southern Energy charged electricity customers on prepayment meters just £356 on average.

Moreover, the added expense of being on a prepayment plan for electricity and gas tends to hit vulnerable households disproportionately, commented Karen Darby, founder of SimplySwitch.com.

It is often the customers who "can least afford it" who end up paying too much for their gas and electricity, she stressed, suggesting a link between customers on prepayment arrangements and the four million households in the UK defined as 'fuel poor' who spend more than ten per cent of their total income on energy bills.

Rather than switching providers immediately, customers should ask that their provider update them to a more modern credit meter, she suggested, and taking that first move then frees customers to switch providers.

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