Prepayment meters (PPMs) are creating hard choices for some of the UK’s most vulnerable people, research from the Citizens Advice Bureau has found.
The charity discovered that, by the end of the second quarter of 2013, 683,796 people with PPMs were repaying debts to energy companies – a 15.5% annual increase.
Overall, 10.8 million UK homes pay for gas and electricity through PPMs, or around 16% of all energy users, and this number is increasing all the time, with an 2,278 PPMs installed across the country on the average working day. Citizens Advice said that when smart meters are rolled out, as many as one-third of all consumers will be on some form of PPM meter.
From today (October 1st) until March 31st 2015, energy suppliers will not be permitted to turn off the electricity and gas supplies of households with young children or with elderly, disabled or sick residents. However, while this moratorium functions for people with standard credit meters, no similar protection is offered for people with PPMs.
- Around half (47%) of all the households with PPMs contain children.
- 54% of all people who have been disconnected in the last year say keeping their meter topped up is one of their “major concerns” – a 6% rise on last year’s figures.
- While some disconnections lasted for just an hour, some people were left without electricity for several months.
- In 43% of cases, Citizens Advice Bureau advisors referred PPM consumers who had been cut off to access a food bank.
PPMs are the most popular method consumers make debt repayments, with Ofgem discovering that most PPMs installed in 2012 were fitted to manage debt. However, the Citizens Advice report also found that:
- 54% of consumers who were initially contacted by their energy supplier regarding a debt ended up with a PPM, but just 34% of consumers who made contact with the supplier themselves did.
- Only 35% of people who pay for their energy bills though direct debits and standing orders ended up with a PPM, compared with 58% of those who paid with cash.
- Every year, people with PPMs pay an average of £80 more for their energy than direct debit customers.
- While 35% of households with two working adults ended up with a PPM, this increases to 41% among those with one working adult and 56% among those in which all adults are unemployed.
- People with health problems are also very likely to have PPMs, with 56% of people with PPMs either having a mental or physical health problem or living with someone who has.
To help people with PPMs who are struggling with their gas and electricity bills, the report recommended that the energy industry, regulators and the government ought to:
- Understand and monitor how people use PPMs
- Prepare in advance for changes to the country’s welfare system
- Consider what the potential implications of any welfare changes could be
- Prioritise PPM options when rolling out smart-meters
The Citizens Advice Bureau has launched a petition calling for energy supplies to offer PPM users better control and improved prices and to enhance the ease-of-use of PPMs.