House of Commons Debate: Who should energy companies be fair to?

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As the months between now and the election next May roll forward, there will no doubt be many debates about the energy industry in the House of Commons. There is one later on today. But what makes this debate interesting is that it’s a debate about which of their customers energy companies should be fair to.

The debate in question is, of course, about how energy companies pass on savings to their customers when they pay by direct debit. It is a debate about whether energy companies should be fair to those customers who pay by cheque or to those who pay by direct debit.

Most of our customers pay by direct debit. This is easier for them, and it’s easier for us. And because it’s easier for us, it’s also cheaper for us. And because it’s cheaper for us, we pass this saving on to our customers, making it cheaper for them.

So what could be wrong with that? As far as these customers go, nothing. But what about those who pay by cheque? Again, we apply the same logic to those who pay by cheque that we do to those who pay by direct debit.

In essence, we reflect the cost of how you pay in the cost we charge.

But the MPs who are supporting this debate don’t want us to do that – it looks as though they want the customers who pay by direct debit to subsidise those who don’t. They say we are overcharging, discriminating against or putting a surcharge on those who pay by cheque. That isn’t true.

As I’m not a Member of Parliament, I don’t get to participate in the debate. But if I did, what I’d is say this: What we are doing now is fair to each of our customers – to do it any other way, wouldn’t be fair. How is it fair that we charge more to the people who cost us less, so that we can charge less to the people who cost us more? Either we reflect costs or we don’t.

According to the press, there’s apparently going to be an investigation by DECC into the amount of discount offered – we welcome that. But the best comment I’ve seen on this issue, is from Michelle Mitchell, Director General of Age UK when she told the Mail in 2012 that ‘Firms must ensure that they continue to offer people a way of paying that suits their needs and should not charge people over the odds for paying in a way that suits them.’ That’s a great summary of what we do – we offer choice, unlike companies in some industries (some telecoms companies won’t take cheques at all), and we don’t make them pay over the odds to do so, we only reflect our own costs.

But I’d like to highlight something else too. Looking at Ofgem figures on how different energy companies get paid by their customers, I noticed that some don’t seem to have any customers who pay by cash/cheque. This is a bit odd – considering every energy company with more than 50,000 customers is obliged to offer all forms of payment. There might be a good reason for this, but I, not sure what it could be.


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