Vulnerable households overpaying for energy by £250m, research suggests

New research by renewable supplier Bulb finds British Gas, Npower and Eon all overcharging prepay customers.

The most vulnerable households in the country are paying out £250 million more than they should on their energy bills, according to new research.

Rules laid out by regulators say that energy firms should only charge a maximum of £63 more for a prepay meter versus a traditional credit one.

However, renewable energy provider Bulb found that British Gas, Npower and Eon are breaking the Competition and Markets Authority (CMA) rules by charging prepay customers far more.

According to the company, 760,000 British Gas prepay customers are paying £222 more a year than they need and 320,000 Npower prepay homes pay £160 more than required. Eon prepay customers pay £51 a year more than they need.

Hayden Wood, co-founder and chief executive of Bulb said: “There’s no good reason why these suppliers are charging prepay customers so much more for their energy.”

Suppliers typically charge more for prepay meters because the cost of running them is higher.

However, regulator Ofgem has said that suppliers must do more to help those on prepay because typically they are used by the poorest homes in the country due to issues including poor credit ratings and large debts on energy bills.

In 2016, the CMA said that the cost difference should be no more than £63 a year. But at British Gas the cheapest prepay tariff for an average home is £1,241.58 a year, whilst the cheapest tariff for traditional meters is £965.12 – a difference of £285.46.

Npower’s cheapest prepay tariff is £1,241.88 versus its cheapest standard tariff of £1,019.03 – a difference of £222.85. Eon is £1,241.88 versus £1,127.95 – a difference of £113.93.

The other Big Six energy suppliers – Scottish Power, EDF and SSE – were all found to be below the £63 threshold.