Energy firms 'broke rules designed to protect poor'

Power suppliers accused of exploiting six million users of pre-payment meters

Britain's big energy suppliers have broken rules intended to stop them exploiting millions of poor customers, according to an investigation by an NGO.

The National Housing Federation (NHF) says that British Gas, SSE, npower, E.ON and Scottish Power breached new licence conditions designed to stamp out overcharging for six million pre-payment customers. Under rules introduced by the energy regulator Ofgem in September, suppliers can only charge more if it reflects the extra cost of providing the service.

Last year, Ofgem set the extra cost of providing pre-payment meters at £88, but the month the new rules came into force, the NHF discovered the firms were charging £100 on average. Scottish Power and British Gas charged pre-pay meter customers £108 and £106 more than those on direct debits, while npower charged £105 more, SSE £102 more, and E.ON £99 more.

The average excess charge was the same as that charged in August, the month before the new rules came in. "This means they failed to make any difference," the NHF complained, claiming its findings cast fresh doubt over Ofgem's ability to "tame" the £27bn-a-year energy industry.

The NHF's chief executive, David Orr, has written to Ofgem demanding an investigation. Ofgem responded by saying it would consider doing so once the letter arrived. In the meantime, it said it had not capped pre-payment meter prices because the costs of providing the service might vary.

"It was never our intention to stipulate a maximum acceptable cost difference as we accept that suppliers' costs for providing different payment methods change over time," a spokesman said. He insisted that the widespread abuse of pre-payment customers had ended, because the difference was much lower than in the past.

The Energy Retail Association, which represents the Big Six, "disputed" the fact that suppliers had breached licence conditions. "Energy suppliers have already taken action to reduce pre-payment tariffs, and in some cases, using a pre-payment meter now costs less than paying by standard credit," a spokesman said, adding that customers should shop around. Ofgem has come under fire for failing to take strong action on pre-payment tariffs. Many people who use them are unemployed, pensioners, disabled or low paid. The average income of a pre-payment customer is £13,500 a year, almost half the national average.

Between 2006 and 2008, power companies made £464m in "unjustified charges" by billing above the costs of maintaining pre-payment meters.

Commenting on his group's latest research, Mr Orr said: "EDF, SSE, npower, E.ON and Scottish Power are to be commended for equalising their pre-pay tariffs with those customers on quarterly bills. However, the fact that five of the Big Six energy companies have already ignored the new licensing conditions shows that Ofgem isn't taken seriously. Ofgem has lost the confidence of millions of pre-pay customers across the country. Ministers now have a duty to end the pre-pay meter rip-off once and for all."

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Lou Reed distorted the truth about his upbringing, and since his death in 2013, biographers and memoirists have added to the myths
musicThe truth about Lou Reed's upbringing beyond the biographers' and memoirists' myths
News
people
News
Ed Miliband received a warm welcome in Chester
election 2015
Life and Style
Apple CEO Tim Cook announces the Apple Watch during an Apple special even
fashionIs the Apple Watch for you? Well, it depends if you want it for the fitness tech, or for the style
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Project Implementation Executive

£18000 - £23000 per annum: Recruitment Genius: They work with major vehicle ma...

Recruitment Genius: Chiropractic Assistant

£16500 per annum: Recruitment Genius: A Chiropractic Assistant is needed in a ...

Recruitment Genius: Digital Account Executive - Midlands

£18000 - £26000 per annum: Recruitment Genius: They work with major vehicle ma...

Recruitment Genius: Web Developer

£28000 - £30000 per annum: Recruitment Genius: This company provides coaching ...

Day In a Page

Armenian genocide: To continue to deny the truth of this mass human cruelty is close to a criminal lie

Armenian genocide and the 'good Turks'

To continue to deny the truth of this mass human cruelty is close to a criminal lie
Lou Reed: The truth about the singer's upbringing beyond the biographers' and memoirists' myths

'Lou needed care, but what he got was ECT'

The truth about the singer's upbringing beyond
Migrant boat disaster: This human tragedy has been brewing for four years and EU states can't say they were not warned

This human tragedy has been brewing for years

EU states can't say they were not warned
Women's sportswear: From tackling a marathon to a jog in the park, the right kit can help

Women's sportswear

From tackling a marathon to a jog in the park, the right kit can help
Hillary Clinton's outfits will be as important as her policies in her presidential bid

Clinton's clothes

Like it or not, her outfits will be as important as her policies
NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

UK's Major Tum to blast off on a spice odyssey

Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
John Harrison's 'longitude' clock sets new record - 300 years on

‘Longitude’ clock sets new record - 300 years on

Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

Let the propaganda wars begin - again

'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
Why Japan's incredible long-distance runners will never win the London Marathon

Japan's incredible long-distance runners

Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
Why does Tom Drury remain the greatest writer you've never heard of?

Tom Drury: The quiet American

His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace