Skip to main content

Utilities: Fees and Charges

Volume 474: debated on Wednesday 2 April 2008

To ask the Secretary of State for Business, Enterprise and Regulatory Reform what plans he has to prevent utility providers charging those who do not pay charges by direct debit more than those who do. (195589)

[holding answer 20 March 2008]: In respect of gas and electricity supply, in broad terms, the rebate given to customers paying by direct debit, rather than standard credit or prepayment, reflects the lower cost of serving direct debit customers. However, Ofgem is currently conducting a probe into the energy market, the results of which will be published shortly. If the evidence shows that prepayment meter users are treated less favourably than other customers in respect of their charges for energy, then we will look to Ofgem and the energy suppliers to come forward with proposals to reduce any disadvantage. If sufficient progress is not made by winter 2008-09, the Secretary of State is prepared to use his existing statutory powers with a view to reducing the differential between prepayment and other forms of payment.

For telecoms, Ofcom is currently consulting on introducing new guidance for communications providers who levy additional charges on consumers, such as for not paying bills by direct debit. This will spell out Ofcom’s view of the law and what providers have to do to meet their obligations under the Unfair Terms in Consumer Contract Regulations 1999 to ensure that additional charges are fair and transparent. Once the guidance has been finalised Ofcom is proposing to give providers three months to comply. Ofcom will then start an enforcement programme.