Advocacy group welcomes regulators move to help those struggling to pay energy bills
CITIZENS ADVICE SCOTLAND (CAS) has welcomed the latest proposals by Ofgem to cap charges imposed by energy suppliers for the installation of pre-payment meters, and their pledge to scrap them completely for the most vulnerable.
The energy industry regulator will use its cap to reduce the average prepayment meter (PPM) installation by up to £300 pounds in many cases helping to alienate the premium that poorer customers end up paying.
The industry body also urged energy companies to help customers manage their debts more responsibly and be responsive and responsibility stakeholders in energy supply.
"Energy suppliers should not be preventing customers from managing their debt through the imposition of unfair and excessive charges." Craig Salter
Craig Salter, energy spokesman for CAS’s Consumer Futures Unit, said: "Warrant charges make it harder for customers who are already struggling to manage their debts.
"Installation charges can be up to £900, and on top of that, prepayment meters often mean customers will be on more expensive tariffs. This means that those in debt are frequently faced with higher gas and electricity bills.
"Energy suppliers should not be preventing customers from managing their debt through the imposition of unfair and excessive charges. Capping warrant charges, and ending them altogether for the most vulnerable consumers, is a step in the right direction, and will help to prevent customers who are already struggling to manage their bills being forced further into debt."
As things stand energy suppliers can charge customers 'warrant costs' when they install a prepayment meter which can cost anywhere from £200 to £900.
Last year, the average bill for a customer across Scotland for a PPM was £400 which was for having the meter installed under a warrant but Ofgem’s new proposals will place a firm limit on charges of £100 or £150.
Both Ofgem and CAS have stated in the past that the warranty fees for installation and the way prepayment meters are, risk pushing increasing numbers of customers into debt.
However, energy suppliers have often advocated warrant charges as a way to negotiate debt collection with customers in the future.
CAS released in 2015 report, 'Paying More to be Poor', revealed that poorer Scots often pay above average costs for energy, telecoms and financial services which as a result worsens their financial situation and negatively affects their health and relationships.
Energy suppliers can charge customers 'warrant costs' when they install a prepayment meter which can cost anywhere from £200 to £900.
Alongside the reductions, plans will also be included to remove PPM warrant charges, and other installation fees for the most vulnerable customers who have physical, mental health issues and learning difficulties.
Rachel Fletcher, Ofgem’s senior partner for consumers and competition, said: "It’s deeply unfair that struggling customers get hit with high warrant costs when they’re already grappling with debt, doubly penalising them.
"Ofgem’s role is to protect every consumer, including the most vulnerable. Suppliers need to help customers manage their debts.
"Suppliers need to ensure that PPMs are only installed under warrant as an absolute last resort. Where they are needed, our proposals will protect customers by limiting PPM warrant charges for all customers and removing them for the most vulnerable."
Picture course of Mxmstryo
Check out what people are saying about how important CommonSpace is. Pledge your support today.