A food bank charity has called for the energy watchdog to intervene after a spate of reports of penniless families self-disconnecting from their gas and electricity, leaving them unable to wash clothes, use cookers or even switch on lights.
Feeding Britain said people on low incomes who used prepayment energy meters were increasingly being pushed into destitution by rising costs, punitive debt collection rules and disproportionately high standing charges.
Cases it has brought to the attention of Ofgem include a single mum who disconnected her heating and electric because she could not meet a combined debt of £15, and a man who self-disconnected after running up an £8.75 debt.
It called the recent energy cost increases the “worst financial crisis in the lifetimes of the all too many people on low incomes” and urged Ofgem, the energy regulator, to upgrade its support package for the poorest consumers.
The charity said it was concerned by the “intertwined issues of debt, standing charges, and self-disconnection” incurred by people on prepayment meters, who paid higher charges for energy despite having the lowest incomes.
It has compiled for Ofgem a list of examples of energy bill-related problems encountered by people on prepayment meters who have approached its members for help with food parcels, and increasingly with fuel vouchers.
These include the requirement that standing charges and debts are paid off before supply starts up, meaning that even adding a £30 fuel voucher’s worth of credit to a prepayment account is in some cases not enough to enable the customer to switch on lights, fridge and cooker.
It has also highlighted onerous standing charges paid by prepayment meter customers, which can amount to 80p a day in some cases. The charges stack up, even when a customer is away or disconnects, creating problems for when they subsequently attempt to switch energy supplies back on.
“We have been appalled to learn of people having to throw away food or, due to their hunger, storing and eating it in hazardous ways (and becoming ill) after disconnecting their fridge and freezer at home. People in this group are also unable to afford the hot water they need to wash themselves and their clothes as often as they need,” the letter said.
Food banks have reported that some clients request their charity food parcels contain no food that has to be cooked, or that needs to be stored in a fridge or freezer, because they cannot afford to top up energy supplies.
Feeding Britain urged Ofgem to reform standing charges, restructure debt collection from repayment meters, and “introduce any other market protections that can help people fend off destitution”.
Citizens Advice told the Guardian it had seen more than 3,600 cases of people unable to top up their prepayment meter so far this year, more than the whole of 2021. Its figures show self-disconnections began to rise rapidly last October, when the £20-a-week boost to universal credit was withdrawn.
About 4.5 million people in the UK have prepayment meters, more than half of whom are paid less than £18,000 a year. They tend to pay more for the energy they use than people who settle bills through direct debit, a phenomenon called the poverty premium.
All consumers have been hit hard by rising energy prices. At the start of April the average bill paid by customers on standard tariffs rose by £693 to £1,971 a year. However, for prepayment meter customers the increase was even higher – up £708 to £2,1017.
Peter Smith, the director of policy at fuel poverty charity National Energy Action, warned that prepayment customers would be “left out in the cold” without more support. They were least likely to benefit from the government’s “heat now, pay later” rebate, which must be repaid through the standing charge.
An Ofgem spokesperson said: “Ofgem is doing everything we can to protect customers during what is an incredibly worrying time for many. Customers who are struggling to pay their energy bills should get in touch with their supplier to access the support that is available such as the warm home discount or affordable repayment plans.
“However unfortunately there are limits to what we as the energy regulator – and the industry – can do to mitigate the impact of record gas prices. This is why we welcomed the government’s intervention to offer energy customers additional support earlier this year.”
