Power giants 'making millions from poorest'

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Energy firms make some of their biggest profits from their poorest customers, the UK's main consumer watchdog claimed today.

Consumer Focus (CF) said it estimated power suppliers were making more than half a billion pounds a year in extra charges from people on prepayment metres. Typical customers using the devices were often those on the lowest incomes, it added.

Jonathan Stearn, CF's campaigner on disadvantage, said energy firms were using customers who pay for their gas or electricity through prepayment meters to help subsidise cheaper deals for others.

He told the BBC: "Companies could be making up to £550 million a year from extra charges they charge on prepayment meters.

"The energy companies are making the most money out of those on prepayment meters and often those are the people on the very lowest incomes."

Energy awareness group National Energy Action (NEA) said prepayment metered customers paid on average £359 more a year than those with normal meters.

This contrasts with the extra annual cost of between £85 and £100 to maintain the prepayment boxes estimated by energy industry regulator Ofgem, the charity added.

A NEA spokeswoman told the BBC that 1,000 people a day are being put on prepayment meters, with many forced to do so after after falling into debt.

She added: "Once you are in debt you are effectively blocked from switching to cheaper deals."

Ofgem has estimated that prepayment meter customers are missing out on savings worth £250 million.

The energy industry body, the Energy Retail Association, has defended the use of the devices, saying many people prefer them because they help budgeting.