Fair By Design responds to Ofgem consultation on payment method cost differentials

Fair By Design, an independent organisation, published its response to Ofgem's consultation on the levelisation of payment method cost differentials on 18 May 2023¹. The response argues that people on low incomes should not pay more for an essential service such as energy because of the way they pay¹.

The organisation said the poverty premium in the energy market remains, with low income consumers spending more on energy¹. It stated that a central point of its response is that people on low incomes should never pay more for an essential service, such as energy, because of the way they pay¹.

To inform the response, Fair By Design held two focus groups with people on low incomes: one online on 25 April with 11 participants, and one in person in Glasgow on 27 April with 13 participants, facilitated by Poverty Alliance¹. The organisation said it wanted to seek views on how people feel about the way they pay for their energy, and that its response aims to represent the views of these people¹.

The consultation itself concerns levelisation of payment method cost differentials, meaning the differences in cost that arise from how a customer pays¹. The response document is available in full from Fair By Design¹. Ofgem's own position on the consultation, and any decision or timetable arising from it, has not been reported in the material available¹.

Why it matters for households

The consultation concerns whether households should face different costs depending on their payment method, for example paying by prepayment meter, direct debit or on receipt of a bill¹. Fair By Design's response focuses on the position of low income consumers, who it says spend more on energy and should not pay more for an essential service because of how they pay¹. The focus groups it held, in April 2023, gathered the views of 24 people on low incomes in total, 11 online and 13 in Glasgow¹. Any change to how payment method cost differentials are treated would affect how much households pay for their energy, but no decision by Ofgem on the consultation has been reported¹.

What happens next

No next steps, decision date or implementation timetable has been reported¹. The consultation response was published on 18 May 2023¹. Further detail on energy regulation and consumer policy is covered in the regulation and policy section.