Ms Issy Petrie:

Last year, we spoke to the committee about our concerns for prepay customers. Those concerns dated back to before the price crisis but have been exacerbated in recent years, as high prices feed immediately into people seeing their meters ticking down and raising the potential for them to be disconnected from their energy if there is no credit left on their meters, they have used the emergency credit, etc.

As to prices, there are two groups of prepay customers, the first of which are those whose meters are referred to as lifestyle meters. They have chosen prepay meters as a way of budgeting or they have newly moved into homes where there are already prepay meters. Those tariffs can have additional costs and service charges, which is where we see the issues Deputy Donnelly referenced and that can be referred to as a poverty premium, that is, paying more for energy. Then there are customers on what are referred to as hardship meters. They use prepay meters as a way of repaying debts or helping them when they are struggling with costs. An important measure the regulator took early in the price crisis was to ensure customers on hardship prepay meters were moved onto the lowest tariffs available from their suppliers. However, there are other prepay customers who are not on hardship meters who do not have this protection and might be paying the poverty premium.

We have a number of recommendations for prepay customers. It is a complex issue that rears its head for customers in different ways. In terms of prices, standing charges are an important factor. We recommended a reduction in standing charges as an important way of protecting people from price increases in recent years. A medium- to long-term recommendation, one that also applies to bill pay customers, is the importance of considering a social tariff targeted at customers who are on the vulnerable customer register due to health or age reasons or who are low-income customers. This social tariff would have a reduced unit rate or block of usage for customers, which could be flexed over time while enabling this group of customers to ensure they have the affordable supply of energy they need.

There are wider issues with prepay customers. Another priority for us is customers who are regularly rationing their energy usage at a low level to ensure their prepay credit lasts through the week or who are what is called self-disconnecting, that is, where the credit runs out.

We want to develop practice and regulation to ensure suppliers and people with access to the backend data from these meters consider how to identify those who are struggling with their energy use and how to reach out, offer them support – this could be people who are regularly self-disconnecting – and ensure they have access to credits. The price crisis is ongoing, with prices still very high, and a clear lesson from it has to do with the particular vulnerabilities of prepay customers and the range of work and development that needs to be undertaken.