Ending the prepay meter rip-off

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From 2006 to 2010, the National Housing Federation lead a national campaign to ensure that prepay meter customers don’t pay a penny more than quarterly billed customers. As of April 2010, all prepay meter customers now pay the same or less than quarterly billed prices.

How the campaign was won

The campaign was launched in January 2007, when the six million energy customers who pay up front to heat and light their homes via prepayment meters paid over £100 per year more than customers who pay quarterly for the energy. Some prepayment customers were being charged £300 a year more than those on higher incomes paying by online debits.

We were extremely exercised about this issue because a large proportion of housing association tenants paid this premium to heat and light their homes. However, back then we didn’t expect our campaign to play a part in a complete overhaul of energy pricing and save prepayment meter customers about £473 million a year.

For the first 12 months of the campaign, we spent most of our time explaining to journalists and MPs what prepayment meters actually were and why it wasn’t acceptable that these low income households had to pay the most to heat and light their homes.

In 2008, energy suppliers shot themselves in the foot by deciding to increase their energy prices twice in one year. With a 35% rise in gas prices and with five million households forced into fuel poverty, the pressure was on suppliers for action.

In response to this public outrage the energy market regulator Ofgem was forced to investigate how energy suppliers calculated their prices and to see if this was actually fair.

While all of this was happening, hundreds of letters were sent from housing associations demanding fairer energy prices for their tenants. The Federation was raising the issue in the national newspapers and news programmes. The highlights appeared on BBC Watchdog twice and stories ran constantly in the News of the World, The Guardian, The Telegraph and on BBC News.

In September 2008, we ran National Energy Action Week. Many housing associations took groups of affected tenants to their MP’s doorstep calling for action. MPs have said that the real strength to our argument was that housing associations across the country backed us.

By the end of that year, E.ON and Npower, who had charged the highest premium in the past, finally got the message and removed their gas and electricity prepayment meter premium. Scottish Power had already done so for both in early 2007.

By 2009, the issue of prepayment meter premiums was a political hot topic. The Government promised action if Ofgem and the energy suppliers failed to address the problem. In the end this was all hot air as Ofgem and the Government decided it was acceptable for energy suppliers to charge more to prepay meter customers because they were more expensive to run.

And so we fought on, working with a number of MPs, led by former MP John Austin and Alan Whitehead MP, to introduce a new law to ban charging the highest tariffs to prepayment customers. The Bill had the backing of 150 MPs and yet without the Government’s support it could not progress. Despite not becoming a law, the Bill achieved the one thing that we had hoped it would do all along by convincing the remaining suppliers to drop their premium.

We called victory on the campaign in April 2010 when British Gas, EDF, Scottish and Southern Energy and the other three suppliers permanently removed their premiums for gas and electricity.

Ofgem’s ‘Update on Probe Monitoring’ report (July 2010) stated that prepayment meter customers now pay £19 a year less than customers who pay quarterly for their energy.

A formal evaluation of our campaign by Firetail said "NHF’s actions during the campaign were a significant factor in the ultimate decisions of the energy suppliers to equalise their prepayment and standard credit energy tariffs. In particular … NHF’s political and media work caused the suppliers to reconsider the value of retaining premiums on their prepayment tariffs."

Clearly this is a huge success for the housing association sector and something at we can all be very proud of. On top of saving our tenants money it has also put the Federation and housing associations on the map as champions for social justice and fairness.

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