Are your bills higher because of how you choose to pay?

I should have explained myself better. My objection to discrimination against people without internet access related only to essential utility tariffs, not other forms of commerce.

As I posted in reply in another conversation:

“You can buy energy from a number of suppliers paying for what you have used, rather than by a fixed monthly amount. Use Which? Switch for example and under “payments” choose “Direct Debit” and then “Monthly variable” or “Quarterly variable”. The lowest tariffs offered were comparable with fixed monthly. At least it worked for my part of the world. ” 🙂

I did reply: “Thanks Malcolm. I assure you I have done this periodically and the fixed monthly direct debit has always worked out cheaper.”

wavechange, my comment was intended to point out that there are options to pay for exactly what you use so others are not under the impression that such options don’t exist.

On payment method it is advantageous for a company to have the certainty of a direct debit payment made at a specific time and paid automatically. There will be some extra administration in processing manual payments – whether cheques or transfers – and chasing late or non-payers.

According to BIS’s guidance at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/175298/13-719-guidance-on-the-consumer-protection-payment-surcharges-regulations-2012.pdf indirect costs cannot be included in any surcharge. Indirect costs would include costs of chasing late or non-payers.

We all have a social obligation to pay our debts on time as well, don’t we? If it costs the supplier money (admin time, postage for example) to chase up late or non-payers then perhaps the best way is to charge just those individuals, as other organisations do (banks and overdrafts for example). Certainly the reliable payers should not be penalised;

I once met someone who made a point of not paying their utility bills until the reminder arrived. I was appalled by their irresponsibility, but I learned that this behaviour is not uncommon. On the other hand, I know that the energy companies are required by law to negotiate with customers who are in debt and cutting off the service is to be avoided if at all possible.

I do support charging those who behave irresponsibly for the extra costs they incur, but I also support current measures to help those who are struggling with debt.

Well I certainly agree with that Malcolm. It would be wrong to generalise that people who do not pay by direct debit are necessarily late with their payments, in fact most customers are probably very diligent. There are processes within society for helping people who are in financial difficulty and it is no part of the energy suppliers’ role to give relief in those circumstances. There are also those who are in no financial difficulty but are delinquent in their payments; I personally see no reason why a reasonable daily surcharge cannot be applied to late payments [after, say, 21 days] and added to the account just as credit card accounts are administered. I trust that would be consistent with the BIS advice that NFH has quoted above.

I would support a surcharge for late payments due to carelessness. I once came back from a long holiday to a red utility bill, which is one reason I have moved all my regular outgoings including credit card bills to direct debit.

My understanding is that, at present, it is the responsibility of the energy companies to deal with those who are in financial difficulty. They can be transferred to a prepayment meter but I’m not aware of surcharges. The universal suggestion is that those who are in financial difficulties should notify companies promptly but in practice this does not always happen.

I have not heard of any surcharges being applied to customers’ accounts for late payment. I expect no company wants to be the first to go down that road – or perhaps the Regulator has warned them against such a move. If such a tariff structure were to be introduced I would hope the late payment surcharge would not be backdated to the date of the bill [like the way credit card interest is retrospective to the date of the transaction] but only to the date by which payment should have been made. I presume that at the moment if there is no response to the escalating final reminders and warning notices the debt is placed in the hands of debt collectors who can ultimately get a court order. I believe that when people inform their suppliers that they are in financial difficulties the energy companies try to come to an arrangement with them to pay by instalments and offer advice on how to economise; this is frequently brokered through the Citizen’s Advice Bureau.

The trouble with putting people on prepayment meters is that it only adds to their financial problems as the tariff is generally higher than a normal tariff. However, it is a last resort and it is difficult to see what other options could be offered in those circumstances. I am sure the energy companies do try hard to help people with large debts but there is a limit to how far they can go.

It looks likely that the smart meter roll out will happen, despite concerns about the cost to consumers and other objections. Presumably it would then not be necessary to charge consumers more if they have a prepay meter provided that they have cleared their debt.

It would be possible to configure smart meters to display the amount currently owing according to the selected tariff. Such a meter might be more helpful to people as they see the pennies ticking up.

Hiding the smart meter under the stairs doesn’t exactly contribute to consumer engagement.

I don’t know what we will have inflicted on us but a friend showed me his neat portable display unit, operated via a wireless connection. Before that was fitted he was getting 44p per unit under the feed-in tariff and his meter was running backwards when the sun shone.