NHF attacks £1.35bn fuel penalty for prepayment meter customers

The National Housing Federation has urged ministers to make energy companies slash prepayment meter bills after revealing their mainly poor customers paid £1.35bn annually in extra charges.

At a Labour conference fringe event, attended by energy minister Malcolm Wicks, the housing association umbrella body said that the 5.7m prepayment customers were charged £322 a year more on average than direct debit customers on the best deals.

This was despite the fact that a typical prepayment meter costs £85 a year to maintain, and that prepayment customers had an average household income of £16,000 a year, well below the average.

Action threatened by Darling and Brown

In March, chancellor Alistair Darling said he would use reserve powers against the companies unless they issued fairer prices for prepayment customers, and this month prime minister Gordon Brown threatened legislation ‘if necessary’.

However, NHF chief executive David Orr warned: “Low income households on prepayment meters cannot afford to wait indefinitely for ministers to finally make up their minds.”

In evidence to energy regulator Ofgem’s onoging probe into the issue, the federation said the government should immediately compel the big energy companies to equalise their prepayment meter and direct debit charges. Ofgem will report on its findings next month.

The federation’s recommendations come at a time when fuel prices are at a record high, following significant price hikes from all six major providers.

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