Some Customers 'Overcharged' by Energy Bills

By Jayne Davison
Published on 6 Oct 2008
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Some Customers 'Overcharged' by Energy Bills

Differing rates for people who pay for their energy using direct debit, or through a pre-payment meter, were cited as areas of concern by Ofgem.

UK gas and electricity firms do not operate as a cartel to fix prices - but do charge some customers too much.

In a new report on the sector, released today, industry regulator Ofgem said that it was putting the providers "on notice" to improve their pricing. The document is the initial result of an investigation from the watchdog, which was launched in February after all of the UK's "big six" energy firms imposed double-digit price hikes on many of their customers within weeks of each other.

Ofgem cited the fact that customers pay significantly less for their fuel if they pay by direct debit - and more if they are on a pre-payment meter - as areas in which pricing could be improved by firms. It has been argued by consumer groups that these differing rates effectively discriminate against low income households - occupants of which might not have a bank account.

The regulator indicated that it would take further action if these pricing improvements were not made.

"Initial findings from our energy market probe give us grounds to demand that companies end practices that hinder customers, especially the vulnerable, from getting the best deal," said Ofgem chief executive Alistair Buchanan.

"If they fail to satisfy our requirements voluntarily then we can move to a Competition Commission reference."

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