The poverty premium was a term coined decades ago to describe the grim reality that people living on the edge often end up paying some of the highest prices for essential goods and services. And nowhere is that gap more evident than in the energy market, where low-income households are far more likely to be on the prepayment meters that mean they end up with higher energy costs than their more affluent neighbours: a longstanding injustice that has never been addressed by government. Last week, an undercover Times investigation revealed the appalling practices being used by British Gas to forcibly install these meters in the homes of vulnerable people.
No vulnerable household should be forced to move on to a prepayment meter. These meters cause two kinds of detriment to low-income households. Energy costs more per unit than paying by direct debit, in part because of the relatively high daily standing charge. Additionally, any debt a customer owes an energy company is added as a surcharge on the per-unit cost, pushing up the effective per-unit outlay even further. If a customer cannot pay, their energy is cut off. But the daily standing charge continues to accrue and their power won’t be turned back on until this accrued charge is paid off. And this at a time when the global energy sector is raking in record profits as a result of Russia’s invasion of Ukraine.
