A perfect storm of rising energy bills, increasing food prices and cuts to Universal Credit is set to have a harsh impact on PPM customers. They are disproportionately likely to be on low incomes to begin with, while energy unit costs are higher for prepayment customers than those paying direct debits.
The energy price cap for dual-fuel PPM customers was recently raised by £153, to £1,309 a year – a higher rise, both in raw and percentage terms, than for direct debit customers. But since those figures apply to only average energy usage, people with higher energy needs will likely pay more. This is particularly true of people living in energy-inefficient housing, who are disproportionately likely to be on low incomes.
Those who’ve been transferred to a new energy supplier after their old one went bust may also see their costs rise more quickly than the energy cap, which itself is expected to be jacked up further next April.
“I was talking to somebody a few weeks ago who was saying that they kind of live in their emergency credit,” said Phil Parkes, volunteer coordinator at Expert Citizens, a Stoke-on-Trent-based network of people with experience of multiple needs, including mental health issues and homelessness.
“This price hike, and this meaning that they’ve got to put more on, means that some weeks they’re going to have to be choosing whether to be able to have electric or to feed themselves. And I don’t think that’s a choice that anyone should be having to make.”
Help is limited so far. The recently announced Household Support Fund, intended to help people in hardship this winter, is worth £500m, which is a fraction of the £6bn a year that will be saved by the recent £20-a-week cut in Universal Credit. The government’s Warm Home Discount scheme also offers a one-off £140 payment towards energy bills – the poorest pensioners receive this automatically, while energy providers offer it to other people based on varying criteria. Energy provider EDF’s scheme, for example, is targeted towards low-income customers who are parents of young children or disabled.
A spokesperson for Ofgem told openDemocracy: “Ofgem’s number one priority is to protect customers. We know this is a worrying time for many people. The energy price cap covers around 15 million households and will ensure that consumers don’t pay more than is absolutely necessary this winter. Any customer worried about paying their energy bill should contact their supplier to access the range of support available.”
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