Each year millions of prepayment meter customers are paying more than they need to for their gas and electricity bills. This totals around £389m in extra payments each year.
In the UK, around four million prepayment energy customers are paying an extra £94 for their usage, with an average total of £1,128 per year. Those on a credit meter pay an annual average of £1,034.
This group of customers includes those who are vulnerable. Their choice of tariffs is also limited, with only four fixed rate deals to select from. In comparison, standard credit meter customers can choose from a whopping 283 tariffs, allowing them to compare more energy suppliers and get a better deal. Furthermore, those on prepayment meters can select from 45 variable rate tariffs, while standard customers have 91 options, giving them more than twice as many to choose from.
Research carried out by Utilitysavingexpert.com identified that nearly 66% of prepayment customers are currently on a standard variable rate tariff, costing an average of £1,195 per year. This figure is £39 more in comparison to a non-prepayment meter standard variable tariff. Prepayment customers pay an extra £33 more each year when comparing a prepayment fixed tariff against a non-prepayment meter fixed tariff.
Not only do customers on a standard credit meter get better savings, they usually switch to a better energy deal. Almost one third of customers on credit meters are on a more expensive SVT.
The price difference between the average credit meter customer on a fixed rate tariff is £219 each year in comparison to a prepayment customer on an SVT. This cost difference can reach an alarming £431 annually when compared to the cheapest fixed credit meter tariff available to energy consumers.
Chris Richards, managing director at Utility Saving Expert, said: “It’s deeply concerning when prepayment meter customers are expected to pay a lot more to heat and light their homes, especially when so many are classed as vulnerable.
“Millions of UK households are living in fuel poverty, according to the latest government report, and this will undoubtedly cause families a lot of distress, especially during the winter months.”
In summary, competition in the prepayment market needs to increase for customers to benefit and receive better value tariffs. It’s no surprise that a lot of prepayment meter users aren’t interested in switching their energy provider as savings are nominal. Fortunately, there is a silver lining to all of this. Many energy suppliers will remove a prepayment meter free of charge for a customer who wishes to switch to a standard credit meter.