With hundreds of thousands of people across the UK falling into fuel poverty, many have no choice but to have prepayment meters installed, but those who do may actually be paying more for gas and electricity as a result.
Prepayment energy meters are usually installed in homes that have slipped into debt with their energy supplier in order to help them manage their debt and budget more effectively, but new research suggests that those who do so may be getting a worse deal.
uSwitch estimates that around 5.9 million people in the UK have a prepayment energy meter, which is perhaps unsurprising considering around five million households are currently in debt to their energy supplier – a figure that has risen by 6% in the last year alone.
With the average household energy bill now at around £1,400 and set to rise further still, the number of people having prepayment meters installed will also increase, but these individuals may actually lose out, according to the Guardian, which claims that millions of UK households are paying up to £300 a year more than those on the cheapest tariffs.
The main problem is that, unlike customers on standard meters who can choose from a range of tariffs and plans, energy providers sometimes offer just one tariff to prepayment customers, which is often far more expensive than the supplier’s best tariffs.
“It’s not just bigger bills prepayment customers face; there are plenty of other downsides. For starters, if you run out of energy unexpectedly, your supply will be switched off until you press the emergency credit button, which gives you time to pop out and top up the card or key,” the newspaper states.
Help is at hand
However, there are options open to those on prepayment tariffs, particularly if they manage to pay off their energy debt and then switch to a post-pay plan.
The energy supplier may insist that customers meet certain conditions before they can switch, such as demonstrating that people have a current account and have been debt-free for at least three months.
Even for those still in energy debt, there are options, however, with prepayment customers able to switch to a prepay tariff offered by a rival provider.
Last year, energy regulator Ofgem increased the amount of debt that can be transferred from £200 to £500, and uSwitch research suggests it may be possible to save up to £138 by switching prepayment tariffs to a more competitive plan.
Consumers with prepayment plans may be more restricted than those on post-pay meters, but they still have options open to them when it comes to securing a cheaper deal and climbing out of energy debt.