Energy Company Charges

Debate between Dan Byles and Robert Halfon

Tuesday 4th February 2014 Commons Chamber

[Robert Halfon]

My hon. Friend is right, as he will understand as I continue my remarks.

[Dan Byles (North Warwickshire) (Con)]

I, too, congratulate my hon. Friend on securing this important debate. Is he aware of any studies or work that looks at exactly how the burden of this problem falls on different income distribution groups? If such work is not available, does he think that Ofgem, or possibly the Department of Energy and Climate Change, should commission it so that we can see exactly where the burden of this disparity falls on different income deciles?

[Robert Halfon]

My hon. Friend makes an important point. I know that Which? has done an enormous amount of work, as have other organisations and the Keep Me Posted campaign. I am sure the Minister has heard my hon. Friend’s remarks.

How do some of the energy companies justify these fees? First, they claim, amazingly, that the fees they charge are proportionate. Under Ofgem’s licensing conditions to energy companies, they are required to ensure that what they charge is reflective of cost. As I have said, I have no problem with a small administrative charge to reflect the extra cost companies face in processing a cheque, but many companies offer a paperless discount of approximately £6 per annum, implying that the cost of letters is £6. Keep Me Posted, after discussions with mailshot companies, has revealed that the cost of printing letters, staff cost, postage and printing is 19p per item. I would therefore question how some companies have concluded that sending out letters can cost up to £15, and whether that is truly proportionate. It is also worth noting that some companies, such as Good Energy and Green Energy UK, do not charge their customers anything different based on their preferred type of payment, believing that customers should not be penalised for how they choose to pay.

Secondly, the companies argue that they should charge more owing to the cost of providing credit to customers. Of course, I understand that when one pays for something retrospectively there is an extra cost, but, as I have said, it is also worth pointing out that some companies that charge retrospectively do not charge anywhere near as much as the big utility companies. BT is not my favourite company. Nevertheless, it bills customers retrospectively for the calls they make, yet charges just £2 a month to customers who do not pay by direct debit. There is no extra charge for any customers who are on a low income and therefore qualify for the BT basic service. I praise BT for making a commercial decision not to rip off their customers and to charge just £2 a month. I believe that companies should be able to meet some of these extra costs themselves. Because of the nature of direct debit payments, customers often pay too much.