ENERGY: Pre payment customers - stop the overcharging!

[Deano...]

You are a pre payment, metered customer:

You go into your local store and pay them for a credit to be put on your energy card - this card is then placed in your meter, crediting your meter with the amount you have paid.
You use your gas/electric, then when this has run out, you visit your local store and buy some more.

The downsides to this system is that you are often on the highest price for your gas/electric.
The upsides to this system is that you do not owe money to the energy companies, you have no big bill coming in, no sudden increases in the amount being taken from your account. You might pay a little more for your gas/electric, but you also have invaluable peace of mind, without the risks of having bank charges to pay because your monthly payment shoots up (as the prices did in autumn of 2008!)

So why the campaign?
In recent months, my home energy providers have been sending me a "statement"
Puzzling, as I don't require a statement as I PAY IN ADVANCE for my energy.
It's ok though, as it just lists what payments you have made right?
WRONG! The statements now list the payments I have made and also tell me that I "OWE them xxx amount of pounds!"
But you pay for your credit in advance?
That's correct! However, the energy companies are now saying that because I buy my gas/electric monthly, the card has missed an update in price, therefore when the price for energy was increased, I was still paying the old price and I now owe them the money that is the difference!
Sounds fair enough, what's the problem?
The problem is this:
When a pre payment customer buys their credit for their meter, they pay IN ADVANCE. Millions of customers pay this way, the money goes directly to their energy provider, the energy provider then has a pot full of money, which they can earn interest on.
In effect, the energy provider has money upfront and as such, has an interest free loan from all its pre payment customers.
Direct debit customers who have paid money and are in credit on their bills, are to receive money back as this practice has been ruled unlawful. So why aren't pre payment customers allowed their money back?
When I pay for gas/electric credit to go on to my card and then to be put into my meter, I pay the price that the electric/gas is at that time. I have a receipt, which under the Sale of Goods Act is a legally binding contract between myself and the energy supplier.
If I buy 20p of gas/electric or £1,000,000 worth of gas/electric, the price of energy can only be charged at the price it is WHEN I BOUGHT IT!

What is to stop the gas/electric company from charging me for my energy use, dependant on the current rate of my bill?
By this I mean, if a price change hasn't been updated to my meter (as I credit my card once a month) then the price could be being adjusted upwards, in order to pay off the outstanding amount that the energy company say I owe them!

The campaign has been launched to protect pre payment customers from having their "statutory rights" broken by energy companies in the UK!
A customer's statutory rights are protected by law in England and Wales, and state clearly that a customer should not be put at a disadvantage by the terms imposed by any company or business.

By changing the price of gas/electric AFTER a customer has purchased some and been issued with a valid contract under law (in England and Wales) ie, their till receipt, which is a contract between both the company and the individual, and as such is legally binding under the Sale of Goods Act, this clearly is a breach of a consumer's "statutory rights" - as it puts the customer at a clear disadvantage!

What can I do?
Write or email your MP - it's amazing how focussed they become with a general election around the corner!
Email consumer direct - a quango they maybe, but they need a number of the same complaints before they will act.
Contact your local trading standards - Consumer direct are normally a vetting service for them, but if they are contacted directly they can alert the governing body who oversee the industry.

If you have anymore ideas, please post them on this thread, thankyou for your time.    

[Deano...]

UPDATE: 7th Sept. 2009

After writing to my MP, requesting information on pre payment customers being over charged and facing arrears (despite paying in advance) and the clear lack of protection and monitoring taking place to look out for this bad practice.

He has kindly forwarded me a document (Attached to this post) for us to view the current information given about this, to the House of Commons various MPs and select committees.
In particular he states, READ: 2.2 Recalibration - dont worry its only a short document.

In the next couple of posts, we shall be questioning the report findings and the information provided

[Deano...]

This report was last updated in June 2009

On 16 October 2008, the new energy and climate change secretary, Ed Miliband, made clear his intention to push for changes on pre-payment meters in his first statement to the House:
"Unfair pricing that hits the most vulnerable hardest is completely unacceptable. I made that clear to the representatives of the big six energy companies when I met them yesterday. I also told them that the Government expect rapid action or explanation to remedy any abuses, and I will meet them again in a month to hear what they have done. We, and Ofgem, are determined to see those issues addressed. Ofgem is consulting on its findings until 1 December as part of a due process, but let me say this: if the companies do not act satisfactorily and speedily, we will consult on legislation to prevent unfair pricing differentials"

I have underlined the issues:
I also told them that the Government expect rapid action or explanation to remedy any abuses - as you will see from further down the report, "rapid action" or "explanation to remedy abuse" is sadly lacking!
I will meet them again in a month - a month? is this rapid?
Ofgem is consulting on its findings until 1 December as part of a due process - This statement was made by the minister in OCTOBER (after large rises for direct debit payers) already, this is almost 3 months after the statement when the minister warned of rapid action - dont forget, winter is THE time that UK households use more electricity and gas!
if the companies do not act satisfactorily and speedily, we will consult on legislation to prevent unfair pricing differentials - There's the inference again, that the minister has requested action "fast" - in his very next sentence he reveals that due process, must be adhered to, which extends the time taken to even answer basic questions will take almost 3 MONTHS!

[Deano...]

The Business and Enterprise Committee conducted an inquiry into energy prices and fuel poverty in 2008

The committee criticised the functioning of the market:
"There has been a widening gap between companies’ direct debit tariffs, and those for standard credit and prepayment meters (PPM). Nine years after liberalisation, this suggests a serious failing in the competitiveness of the market"

The report called on Ofgem to pursue its market probe thoroughly and, if no satisfactory resolution was found, to pass the matter quickly to the Competition Commission

So after this report in 2008 (no exact date given for it) yet another official body found fault with pricing (albeit on the wrong issue) and once again pointed at OFGEM to continue its probe into the issue and then simply suggested that if it found against the big 6 energy companies, it should refer it to yet another committee?

In June 2008 Ofgem released figures to show that nationally prepayment meter customers were losing out on savings worth £250 million by not switching supplier

Another misconception by OFGEM the regulator for the industry. Why is the only way "to switch supplier?"

Notice how all these reports always quote percentages rather than actual numbers?

There was an increase to 100,000 in the number of token meters in debt in the first half of 2008, due to price rises. In the second half of 2008 the number declined to 62,000.

Even after a "decline" there remains 62,000 HOMES that are showing a debt against their pre payment accounts for energy!

I can prove that energy companies are adjusting my energy costs per therm/unit, without my consent to repay monies they say I owe.
6 months ago, I was informed I owed my electricity company just over £35, despite paying in advance for my supply.
6 months later, I was informed that the amount in arrears that I owed was down to £7.
If the energy companies are not increasing charges, to recover money that they say people owe them, then how can my so called arrears be reduced?

What's clear from the information provided by my MP:

• OFGEM are not even concerned nor are they looking at the so called arrears being claimed by increasing the unit price when the meter owner buys his energy.
• OFGEM are not "speedy" or reacting quickly to constant complaints of other industry bodies and campaigners

• OFGEM are not even checking for any of these occurances
• Repeated government assurances that they are "acting fast" are shown to be false.

The next step of our campaign: reporting energy companies to trading standards, as they are in breach of my statutory rights by increasing their prices, AFTER I have purchased their product!