Addressing Poverty Premium of Pre-payment Meters
Food prices are rising, fuel prices have skyrocketed, and people all over Scotland continue to be affected by the increasing cost of living.
To exacerbate this, rises in electricity and gas costs are sending family bills soaring, with average households facing another £800 a year in energy costs.
We are heading towards a situation where hundreds of thousands of families no longer choose between heating or eating – they can afford neither.
And matters are even worse for those on a prepayment meter. In August 2021, there was a £26 difference per year between the cheapest dual-fuel deal for a household paying by direct debit and the same household with a prepayment meter.
It is a disgrace that the UK presides over a system whereby pre-payment meters, often used by the poorest in society, offer more expensive gas and electric than alternative routes.
Here in Angus, 21% of households have prepayment meters and of prepayment meter households in Angus, 35% are fuel poor.
To tackle the issue, Ofgem have recently introduced measures to ensure energy suppliers provide appropriate and consistent support to their customers, particularly those with prepaid meters who may self-disconnect, or severely ration their energy use.
But more still needs to be done. The SNP have pushed for proper and consistent support from energy suppliers that reflects consumers’ needs.
Energy bosses have told MPs they want radical reform of energy regulation and pricing, with the introduction of a “social tariff” so the scandal of the poorest – those on prepayment meters – paying most per unit of energy would be ended, and the richest would pay most.
In the short and long term, energy bosses argue that those with deepest pockets should subsidise the poorest. The risk in all of this of course is that those who are things stand are teetering would actually topple into the genuinely impacted category if a “social tarrif” were introduced.
The government regulators Ofgem are pushing for the instillation of smart prepayment meters over the traditional legacy meters, providing a smart meter rollout target of 2025. They report this would have immediate benefits to consumers, helping them to take control of their energy usage. However, there are concerns over this approach and the risk it has in promoting self-rationing.
While there appears to be a multitude of suggestions, there is no easy answer to how we tackle this growing issue. It is however essential, that the inequality that prepayment meters presents is addressed.