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Consumers who pay for their gas and electricity supplies in cash, by cheque or pre-payment meters - 53% of all electricity customers and 49% of gas customers - could have grounds for suing the companies for over-charging them. They are paying hundreds of millions of pounds a year more than they should, according to the parliamentary Business and Enterprise Committee.
“Standard credit" customers, who pay by cash or cheque, were being charged on average 11% more (£89 a year) than those paying by direct debit. Customers using pre-payment meters were paying £144 more a year, the committee found.
Energy companies say the higher prices paid by cash and meter customers reflect the higher cost of processing the payments, but Ofgem, the energy regulator, says the cost to companies of processing standard credit payments is only £20 – which means that customers are being overcharged by £69 a year. For meter payments, the cost is £85, so the excess charge is £59.
Ofgem is to publish a report on the energy sector next month, which is expected to criticise the supply companies and encourage customers to apply for refunds.
Tom Brennan, the barrister who brought a test case on bank charges, believes customers may be able to sue for their money back under a 2003 EU directive on fair pricing. Quoted by the Daily Telegraph, he said: "It would suggest the consumer could and should bring these claims to a court if they cannot obtain a refund from their supplier."
Labour backbenchers and trade union leaders are also pressing for a windfall tax on energy companies, in the wake of British Gas’s announcement last week that it was raising prices by 35%.
But obliging companies to contribute more to "social tariff" schemes that cut prices for the poorest and most vulnerable customers would appear to be more to the Government’s taste.
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