Edward Davey MP writes… A better deal for people on ‘pre-payment’ energy meters

Electric Meter on the Back of the HouseLiberal Democrats in Government are doing everything possible to help consumers with their energy bills.  Just last week I announced that by the end of the year energy suppliers will halve the time it takes to switch energy supplier from the current five to two and a half weeks.  This is just the first step to achieving my ambition of achieving 24 hour switching.

But there is more that can be done, and I have written to energy suppliers asking them to now focus on pre-payment meter (PPM) customers.   There are about 4.3million households, or 16% using them in Great Britain and it costs them more than paying via direct debit.  Although the difference has fallen in recent years, on average they still pay around £105 per year more.

So what can be done to speed things up and reduce this difference further, and ideally eliminate it?

We have already announced that Smart Meters – the next generation of gas and electricity meters – will be rolled out between 2015 and 2020.  They will help consumers to take control of their bills as they’ll get ‘real time’ information to help them control and manage their energy use.   But they also offer a way forward for tackling the PPM problem.

So, I have challenged energy suppliers to do two things to help those on PPM:

  1. As part of the planned Smart Meter rollout ensure that from the end of 2016 current ‘normal’ meters are replaced only with Smart Meters.
  2. Offer Smart Meters with ‘pay as you go tariff’ options to all PPM customers by the end of 2016.

How will this help?  If energy suppliers rise to the challenge and ensure their PPM customers are prioritised, they get the benefits of Smart Meters sooner rather than later.

The details of ‘Pay as You Go’ for Smart Meters will be for individual suppliers to decide, but they should allow consumers to top up in similar way to how many already do with their mobile phones. The new ways of ‘topping up’ should mean that energy suppliers reduce their costs, for example by reducing what they currently pay retailers to administer PPM top-ups, and to replace  ‘normal’ meters with pre-payment and vice versa.  These savings should be passed onto PPM consumers and they should see their bills fall.

The ‘Big 6’ that Labour created are fast realising that they must adapt or hemorrhage customers to the smaller players that have doubled under this Government.  They have already agreed to massively reduce switching times and over the coming days and weeks we shall see how many rise to the challenge of prioritising their PPM customers and giving them a better deal.

If they don’t, there are now 18 independent suppliers challenging the big six. Some specialise in prepayment meters and smart deals. That’s why this is a challenge with real teeth.

* Ed Davey is the MP for Kingston & Surbiton and Leader of the Liberal Democrats

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  • Eddie Sammon 30th Apr '14 - 1:27pm

    This sounds good.

  • A Social Liberal 30th Apr '14 - 9:13pm

    Why should there be different tarrifs at all? If a family eats two pounds of apples a day or six, they still pay their supermarket/market stall/greengrocer the same amount per pound. Why should it be different just because the consumed item is gas or electricity? Basically it is just another way of ripping customers off!

    As for PPM, the people who have to suffer those are amongst the canniest consumers out there. They know how much they have got to spend on energy and by and large do not exceed it. They never owe the gas company money, never get into arrears of more than seven pounds. They, we (for I am one of those who have a PPM) pay the most for being some of the energy companies best customers!

    And it is wrong!

  • Eddie Sammon
    Would you find it equally interesting to hear from the Secretary of State for Energy and Climate Change as to why he wants to subsidise new nuclear power at Hinkley C despite the fact that at our party conference last autumn he said his policy was against subsidy ?
    Would you find it equally interesting to hear why he thinks it is a good idea to strike an agreement with state controlled corporations from France and China to subsidise them by overcharging consumers for their nuclear electricity ?

  • Eddie Sammon 30th Apr '14 - 10:43pm

    Hi John, I don’t understand the subsidy thing. If Nuclear power is greener than, say, coal, then what is wrong with paying more for it? I don’t see this as being a subsidy, just a different price.

    I understand you don’t like nuclear power, but we can have disagreements.

    I think you have a point about saying he was against subsidy at conference and then paying a higher price for it, but it fails to get me angry. I’d probably have to witness it to get genuinely annoyed.

  • There is very little difference in price (to the business) of payments/top-ups via mobile phones and top-ups via retailers.

    Being a little cynical, I like the the words “help consumers to take control of their bills” – the absence of any real reference to cost is notable; this is probably because the roll-out and operational costs of Smart Meters will be added to our energy bills…

  • Eddie Sammon
    Let me put it this way.
    You are a businessman. You want the best deal.
    Someone offers you a deal which is more expensive, puts your future in the hands of the Chinese Communist Party and creates an ever growing problem of poisonous waste which threatens to kill your children and destroy the natural environment.
    Do you say — ” yes this is a great deal ” ?
    Or do you say — ” no thank you, this is a ridiculous deal “.
    Or do you pretend this deal is all about being “green” and carbon friendly and try and divert attention with gimmicks about switching between dealers ?
    Or do you at least scratch your head and ask what Ed Davey’s priorities are?

    In may last year parliament debated an amendment to the Energy Bill.
    Caroline Lucas, the MP who put forward the amendment spoke in the debate prior to the vote to say —

    Does the Minister agree, however, that the Government’s position on nuclear ought to be guided by the coalition agreement, which clearly stated that new nuclear should “receive no public subsidy”?
    Is he not acting rather like Humpty Dumpty in “Through the Looking Glass”, in that he is making words mean what he wants them to mean? Subsidy means giving extra money to that technology; it does not matter that he is also giving subsidies to renewables. He seems to be arguing that it is not a subsidy if it is being given to renewables and to nuclear, but it is still a subsidy.
    Will he not recognise that and stick to the line in his own coalition agreement?

    She later added —

    Amendment 24, which has cross-party support, would simply ensure that payments under a CFD for nuclear electricity are not greater than payments for any form of renewable generation, in terms of price per megawatt-hour and taking into account the length of the contract provided.
    Contracts for differences are the contracts under which subsidies are paid developers of low carbon electricity generation; ensuring generators get paid at the level determined to be necessary to support the particular technologies supported by the scheme.

  • Eddie Sammon 1st May '14 - 8:09am

    John, I think you make some good points, there are certainly aspects of it I am not comfortable with (such as the environmental risk, the cost of capital and the source of funds), I am just not really interested in splitting hairs when it comes to supporting broadly centrist politicians. However, my support for anything and anyone is not unconditional, as I have shown in the past when I have flipped out at Clegg over what I thought were misleading claims over Syria, poor spending decisions, the party of IN campaign and the low poll ratings.

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