All you need-to-know on prepayment meters and tariffs
Customers who pay for their gas and electricity supply through a prepayment meter often end up paying more on their energy bills compared to those who pay through direct debit. Instead of paying via direct debit or on receipt of a bill, customers who use prepayment meters have their energy supplied to them on a ‘pay as you go’ tariff.
In most cases, customers will make payment via a key, token or a smartcard that can be topped up with credit at a local post office or another convenience store where a PayPoint sign is shown. There are some companies that will offer you the ability to pay through a mobile application or the smart meter itself.
Once your prepayment meter runs out of credit, your energy will be on hold until you have topped up again, this is similar to using a pay as you go top up on a mobile phone.
Aside from the above inconvenience, generally these prepayment meters and tariffs will require customers to pay more for their gas and electricity compared to those paying through other options. Unfortunately, it gets worse, consumers on these meters can often be the most vulnerable and may have been moved over to a prepaid meter due to past financial problems.
The Competition and Markets Authority (CMA) stated in March 2016, that around four million UK households on prepaid meters were generally paying an additional £300 for their energy in comparison to those not using these pay as you go meters. These results were used in the CMA’s provisional decisions into reforming the energy market.
Fortunately, things are improving, UK customers should be able to take advantage of smart meters by 2020 to monitor energy usage. In the meantime, a temporary safeguard price control was proposed in March 2016, this will help to protect those on prepayment meters, and this initiative will endeavour to reduce bills by approximately £300million per year.