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Prepayment Meters - a Solution, Not a Problem

Originally Published 5 June 2001

Prepayment meters for electricity and gas using a charge card or key are unpopular with some policy makers and consumer lobby groups, as failure to charge the card or key results in self disconnection. However, new research carried out by Warwick Business School and the University of East Anglia on behalf of the Electricity Association Fuel Poverty Task Force, shows that this form of payment remains popular with low income customers.

As part of the fuel poverty agenda, both government and Ofgem want to reduce the numbers of prepayment meters in use and most new entrants to the industry actively discourage prepayment.

Over 3400 low income consumers were interviewed together with 42 managers from energy supply companies throughout Britain in the first study of this scale to look at both consumer and company attitudes and behaviour. The study discovered that, far from showing concern about self disconnection or higher charges, low income customers preferred prepayment as it allowed them to budget according to their needs, to control their consumption and not to run up large debts.

The study found that, although a quarter of prepayment customers had self disconnected during the previous year, the majority of these did so simply because they forgot to recharge their cards.

Although the fact that some consumers need to restrict their fuel consumption is deplorable, the report suggests that, rather than further restricting the choices of these low income consumers by discouraging this popular system, government, regulator and suppliers should focus on how to widen the options available to prepayment meter users.

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Founded in 1967, Warwick Business School is one of the most successful and highly regarded business schools in Europe. It has a turnover of ?24.6 million. The current student population of 1,070 undergraduates, 170 research students and 2,824 taught masters, MPA and MBA students, come from 108 countries worldwide.