LONDON--(BUSINESS WIRE)--Today, Fideres released new research uncovering widespread discriminatory conduct in the market for household gas/electricity – affecting 2 million minority households. This Christmas season, households across the UK will be hit with soaring energy bills as prices rise for the winter – but some will feel the pinch more than others. Customers on a prepayment meter (PPM) historically paid £100-£270 per year more than the cheapest direct debit tariffs. And unlike, the general population, most prepayment customers are either minority ethnic, a single parent, or disabled. These protected groups consequently overpay £200 – £500 million per year without justification, for at least the past 10 years.
Alberto Thomas, founding partner at Fideres, said “In the current cost of living crisis, Fideres is more committed than ever to shedding light on this type of misconduct through our investigations.”
The economic vulnerability of prepayment customers results in a substantial poverty premium each year. The CMA found that “The range of tariffs available to prepayment customers is significantly more limited … [and] are significantly higher (even accounting for differentials in the costs to serve) than the cheapest tariffs in the direct debit segments.”
The UK’s Equality Act of 2010 shields people with protected characteristics from so-called “indirect discrimination” – when a facially neutral policy has a disparate impact on a particular group of the population.
Here, because the additional cost of PPMs disproportionately falls on ethnic minorities, single mothers, and the disabled - historic PPM tariffs may constitute indirect discrimination in contravention of the Equality Act.
Earlier this year, Ofgem equalized the caps between prepayment and direct debit. This meant that prepayment customers would pay the same amount as direct debit customers – showing that they never should have been more expensive in the first place. The problem is that Ofgem announced that the new price caps taking effect on January 2024, would once again put prepayment prices above direct debit, so Fideres expects the same old problem to re-emerge.
The full research is available at: https://fideres.com/our-research/
About Fideres
Fideres is an international economics consulting firm, specialized in investigating corporate misconduct, market manipulation and abuses since 2009. Fideres has developed a unique expertise in identifying breaches of competition laws and our proprietary work has led to the filing of over 15 class actions. More about the firm and its work at www.fideres.com. Follow the firm for updates and news at @Fideres.
