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A report from the NHF claims that households using pre-payment energy meters were overcharged by nearly half a billion pounds between 2006 and 2008. Getting a refund may not be straightforward, but that shouldn’t stop you trying.
By Mark Dennis - www.money.co.uk
What is a prepay meter?
A pre-payment meter is a device that allows households to pay for their gas and/or electricity up-front, rather than via a quarterly bill. Users ‘credit’ their meters either by using a top-up card or by buying tokens. Pre-payment meters are often the only option for low-income households, or those with poor credit ratings.
Who has been overcharged?
It seems that pretty much any household with a pre-payment meter has been charge too much for their energy at some point over the last two years.
Who says they have been overcharged?
This all stems back to the energy companies’ and the energy regulator’s failure to comply with EU rules introduced in 2004. The rules stated that energy companies could not charge pre-payment customers more, unless it is to cover an additional cost related to supplying and maintaining pre-payment meters.
According to the energy regulator, Ofgem, that extra cost should not exceed £87 per year. However, according to the National Housing Federation (NHF), some pre-payment customers paid £500 more for their energy than direct debit customers during 2008.
Which companies have overcharged?
It appears that between 2006 and 2008, British Gas, E.ON, npower, Scottish and Southern Energy and Scottish Power have all overcharged their pre-payment customers for energy.
Are they still doing it?
It seems that the suppliers are starting to take note. Scottish Power, E.ON and npower have stopped charging gas and electricity pre-payment meter customers more and have brought their prices in line with those charged to quarterly billed customers. British Gas, EDF and Scottish and Southern Energy are still charging their gas prepay customers more, but have removed the premium they charged for electricity.
Why don’t pre-payment customers simply switch suppliers?
Sadly, this is not always an option. Official figures show that in 2007, more than 350,000 pre-payment meters were installed, and 63% of them were put in place to recover debt. It is much harder to switch energy suppliers when you are in debt, so many pre-payment customers are stuck with the supplier they have.
Is it possible to reclaim money overpaid on my pre-payment energy?
It is important to point out that the process for reclaiming this money is not as well defined as that used to reclaim bank charges, and that the campaign does not yet have the official backing of the Office of Fair Trading. This means that the process of reclaiming money is still being defined and you may not be successful – however, the more people complain and demand refunds, the more the suppliers and regulators will take notice. At the very least, taking action now will help to ensure that pre-payment meter users are treated more fairly in future – and getting a refund is certainly not out of the question.
How do I go about asking for a refund?
The NHF is urging pre-payment customers to raise their concerns with the Government, whilst writing to their suppliers to demand a refund.
First, it suggests writing to Ed Miliband MP, Secretary of State for Energy and Climate Change.
Second, it provides a template letter you can use to complain to your supplier and demand a refund. To complete the template letter you will need to know the name of your suppler, its address and your customer account number.
What happens next?
Once you have emailed Ed Miliband and written to your supplier, you will have to wait and see what response you get. Remember that the campaign to recover these overpayments is in its early stages, so you might have to be patient and see how the issue develops over time – a process for taking legal action is not yet defined, for instance.
However, if the energy companies do start to issue refunds, or are forced to, you will have already registered your claim, so should be towards the front of the queue when money is being given back.
By Mark Dennis - www.money.co.uk
What is a prepay meter?
A pre-payment meter is a device that allows households to pay for their gas and/or electricity up-front, rather than via a quarterly bill. Users ‘credit’ their meters either by using a top-up card or by buying tokens. Pre-payment meters are often the only option for low-income households, or those with poor credit ratings.
Who has been overcharged?
It seems that pretty much any household with a pre-payment meter has been charge too much for their energy at some point over the last two years.
Who says they have been overcharged?
This all stems back to the energy companies’ and the energy regulator’s failure to comply with EU rules introduced in 2004. The rules stated that energy companies could not charge pre-payment customers more, unless it is to cover an additional cost related to supplying and maintaining pre-payment meters.
According to the energy regulator, Ofgem, that extra cost should not exceed £87 per year. However, according to the National Housing Federation (NHF), some pre-payment customers paid £500 more for their energy than direct debit customers during 2008.
Which companies have overcharged?
It appears that between 2006 and 2008, British Gas, E.ON, npower, Scottish and Southern Energy and Scottish Power have all overcharged their pre-payment customers for energy.
Are they still doing it?
It seems that the suppliers are starting to take note. Scottish Power, E.ON and npower have stopped charging gas and electricity pre-payment meter customers more and have brought their prices in line with those charged to quarterly billed customers. British Gas, EDF and Scottish and Southern Energy are still charging their gas prepay customers more, but have removed the premium they charged for electricity.
Why don’t pre-payment customers simply switch suppliers?
Sadly, this is not always an option. Official figures show that in 2007, more than 350,000 pre-payment meters were installed, and 63% of them were put in place to recover debt. It is much harder to switch energy suppliers when you are in debt, so many pre-payment customers are stuck with the supplier they have.
Is it possible to reclaim money overpaid on my pre-payment energy?
It is important to point out that the process for reclaiming this money is not as well defined as that used to reclaim bank charges, and that the campaign does not yet have the official backing of the Office of Fair Trading. This means that the process of reclaiming money is still being defined and you may not be successful – however, the more people complain and demand refunds, the more the suppliers and regulators will take notice. At the very least, taking action now will help to ensure that pre-payment meter users are treated more fairly in future – and getting a refund is certainly not out of the question.
How do I go about asking for a refund?
The NHF is urging pre-payment customers to raise their concerns with the Government, whilst writing to their suppliers to demand a refund.
First, it suggests writing to Ed Miliband MP, Secretary of State for Energy and Climate Change.
Second, it provides a template letter you can use to complain to your supplier and demand a refund. To complete the template letter you will need to know the name of your suppler, its address and your customer account number.
What happens next?
Once you have emailed Ed Miliband and written to your supplier, you will have to wait and see what response you get. Remember that the campaign to recover these overpayments is in its early stages, so you might have to be patient and see how the issue develops over time – a process for taking legal action is not yet defined, for instance.
However, if the energy companies do start to issue refunds, or are forced to, you will have already registered your claim, so should be towards the front of the queue when money is being given back.
