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Consumer advocates and welfare agencies have submitted a joint submission to the Energy and Water Ombudsman NSW’s prepayment meter discussion paper.

We support joint work by consumer groups, ombudsmen, government, the energy industry and others in the community to reduce disconnections, minimise customer debt, and improve affordability. This submission critiques the use of prepayment metering in pursuing these goals and proposes alternatives.

Prepayment meters (PPMs) are often proposed as a solution to energy affordability for low-income households. We oppose PPMs because they harm vulnerable customers. PPMs:

• do not solve the problem they are supposed to
• offer nothing to vulnerable consumers that cannot be delivered by other means
• cannot provide all the elements of the customer protection framework

PPMs, by constraining consumers’ choices, can limit their access to the full range of energy products and prices. In Victoria, all consumers, including low-income households, have paid for smart meters to give them these choices; and they should get the benefit of their investment. PPMs exclude people from the mainstream market, creating a second class of consumers. This runs counter to government objectives for energy market policy, which is predicated on all households being able to participate in the energy market equally, by choosing products, tariffs, and service levels appropriate to their needs.

PPMs give people a poorer service, and often encourage them to restrict energy use at the expense of their health and well-being.

PPMs undermine the fundamental principle that no one should be disconnected from supply because of an inability to pay. Indeed, the euphemistic term ‘self-disconnection,’ implies that a free choice to go off supply has been exercised by the householder.

This submission expands on these points by defining ‘prepayment metering’, identifying the problems purported to be solved and actually solved by prepayment metering, and analysing the ostensible advantages and disadvantages of prepayment metering as outlined in the discussion paper.

Some consumer advocates and community service workers support PPMs because of the way they prevent vulnerable households from accumulating energy debts – however there is little recognition of their impact on levels of other types of household debt. Some households with PPMs like them for a similar reason – however when asked about it, their answers reveal lowered expectations that point to a fundamental level of disadvantage that runs counter to community expectations for a basic standard of living.

A full copy of our submission is available by clicking: Joint consumer submission to EWON prepayment meter discussion paper.