3.3 Direct debit is cheaper for energy companies to administer as it is
an automated withdrawal of payment, as this is cost effective for the
companies, the customers should receive a discount for this. As Ofgem
point out, if the “additional costs [ for administration of alternate payment
methods were to be] equally [distributed] across all consumers [there]
would [be an] increase [in] bills for direct debit customers. This includes
households in fuel poverty, of whom almost 50 per cent pay by direct
debit” (2014, p. 7).
3.4 Note the language of choice in the question, as switching payment
plans for energy is not a matter of choice for many households, as many
households are forced to pay via prepayment methods and are not able to
choose direct debit. As the Citizens Advice found that “more than five
million people live in households that are in debt to their energy supplier”
(2024, par. 4), and households are not allowed to switch off their
prepayment meter when they have energy debt. This may negatively
impact and damage the finance of the poorest households across the UK.
Those who would not be financially able to commit to direct debit
schemes would be essentially penalised with higher bills because they are
not wealthy enough for the financial commitment.
3.5 Management of direct debit accounts is typically managed online,
and a discount for this tariff restricts those without access to a computer
or those who struggle with technology, like the elderly, from accessing
these discounted costs. Similarly, Robert Halfon Conservative MP shares
concerns that direct debit reductions may discriminate against the elderly
who still commute to post offices or banks as they miss out on online
deals (2014).
3.5.1
Octopus Energy also shares concerns for pension
paying customers, stating that “pensioners are particularly affected
by this issue, with almost a third of them using these methods [not
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