Unions pledge to address ‘unjustifiable’ costs of prepayment energy meters

Labor has said it wants to end the “outrageous” bonuses faced by customers of prepayment energy meters.

Shadow Chancellor Rachel Reeves has said Labor will end the ‘unjustifiable’ practice which can result in people with prepaid energy meters being charged more than those paying by direct debit.

The call for change comes as analysts predicted typical energy bills could reach around £3,500 in October and over £4,200 in January.

Labor estimates its policy would help bring prepaid energy prices in line with direct debit customers and bring relief to four million homes.

The party said its plans were part of a wider package of cost-of-living measures that Ms Reeves, Labor leader Sir Keir Starmer and Shadow Energy Secretary Ed Miliband had been working on before the announcement of the August price cap by Ofgem.

Ms Reeves said: ‘It is outrageous that people using prepayment meters have to pay more for their energy. Why should the poorest pay more to heat their homes and turn on the lights? It is unjustifiable and morally reprehensible.

“As energy prices soar, this unfair prepayment premium must end. Labor would make sure no one pays more for the same gas and electricity everyone gets, while taking wider action to help people manage their bills over the winter.

She added: “We are in the midst of an energy emergency that will only get worse. A crisis like this requires strong leadership, but instead the Conservatives have lost control of the economy and have nothing to offer. They need to pull themselves together and take urgent action.

“Labour will take the necessary steps to get us through this national emergency and build the stronger and safer economy that Britain deserves.”

It is understood Labor would eliminate the gap between the two price caps and reimburse energy companies for the difference over the winter, which is estimated to cost around £113million between October and March.

This would be paid for by a beefed up windfall tax on oil and gas companies, which the opposition says currently presents a ‘loophole’ that allows energy giants to exploit it in order to pay less tax .

Labour’s calls for change come after a meeting between ministers and energy leaders on Thursday in which the Prime Minister called on bosses to help ease cost of living pressures.

Following a roundtable with the sector in Downing Street, Boris Johnson said: “We will continue to urge the electricity sector to continue to work on ways to ease cost of living pressures and invest more and faster in UK energy security.”

However, no new immediate measures have been announced to help consumers.

A boss at one of the UK’s biggest energy companies has agreed the regulator should examine how bills for customers of prepayment meters could be reduced.

Philippe Commaret, EDF’s managing director of customers, said: “There is a certain correlation between customers who are financially vulnerable and those who pay for their energy in advance, so the fact that these customers pay more is unfair.

“It is also obsolete thanks to pay-as-you-go smart meters. We would like Ofgem to consider how the price cap for pre-payment smart meter customers could be reduced.

A Department for Business, Energy and Industrial Strategy spokesperson said: ‘Prepayment meters remain an effective way for people to pay for their energy use while managing costs and debt, while that the energy price cap protects four million prepaid meter customers. overloading of energy suppliers.

“We understand that global inflationary pressures are straining household finances. That’s why we’re offering a £37billion support package to help households in these difficult times, including a £400 cut on energy bills accessible to users of prepaid meters and 1,200 pounds sterling to around eight million low-income households. ”

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