Tag: prepayment meters

Prepayment meter customers to pay less for energy from today

Prepayment meter households will no longer pay more on average for their energy than direct debit customers, as the UK Government scraps unfair charge

  • Unfair charge on prepayment meter customers scrapped
  • change will help around three million households and save on average £21 a year
  • together with the new energy price cap taking effect today, households will save hundreds of pounds on their bills

Fairness will be delivered for households today as the government scraps the unfair charge on prepayment meter customers.

The change, taking effect from today, will help around three million households using prepayment meters across Great Britain – bringing their bills in line with those who pay by direct debit, with the government stepping in to cover the difference.

Currently, households on the pay-as-you-go meters pay more on average than direct debit customers, as it costs suppliers more to service their homes – such as collecting payments or giving out vouchers – with the charges passed onto consumers.

Removing the prepayment meter premium means these households will save around £21 a year on their bills, making sure the system is fair and providing extra support to consumers who are typically on low incomes.

Scrapping the prepayment meter premium comes as Ofgem’s latest price cap takes effect today – which thanks to improvements in the wholesale market, will bring the typical annual energy bill down from £2,500 under the Energy Price Guarantee to around £2,074. This will help lower inflation – one of the Prime Minister’s five promises – as high energy prices drive up prices across the economy.

The fall in energy bills will save the average household around £426, or 17%, and means for every £100 previously spent on energy bills, consumers will now pay £83.

Energy Consumers and Affordability Minister Amanda Solloway said: “No one should be charged more for having a prepayment meter – today, we’re putting an end to this historic injustice.

“With households on prepayment meters typically on some of the lowest incomes, this is a vital change.

“Alongside the hundreds of pounds coming off energy bills from today, thanks to the fall in the price cap – this will offer extra help to ensure families stop being unfairly penalised.”

To ensure the prepayment premium comes to an end as quickly as possible, the Government will be funding the change up to April 2024. Ofgem as the energy regulator will be devising a plan that will eradicate it permanently after that date.

Earlier this year the government took steps to crack down on the abuse of prepayment meters by energy suppliers. The Energy Security Secretary Grant Shapps demanded action from Ofgem and suppliers to put an end to wrongful prepayment meter installations in vulnerable households.

The government is clear moving customers to prepayment meters must always be the very last resort and has asked for regular updates from Ofgem and consumer groups to make sure all suppliers adhere to the regulator’s new Code of Practice – which puts measures in place to protect against them being installed in homes where they shouldn’t be.

Recent figures showed nearly £40 billion was spent by government between October 2022 and March 2023 to help keep household and business energy bills down, the most ever provided to subsidise household bills in UK history.

Over winter, the government covered nearly half a typical household’s energy bill and saved the average home roughly £1,500 by the end of June. That included providing £650 million to households on traditional prepayment meters through the Energy Bills Support Scheme.

The scheme saw vouchers totalling £400 issued over six months from October with latest figures showing 85% had been redeemed by the end of May.

While the deadline for applications has passed, that number is expected to rise with the last applications and reflected in figures due over the Summer.

Friday is fuel poverty voucher deadline

Households in Edinburgh are being urged to check if they are eligible for over £1.3m of unclaimed fuel poverty vouchers before the deadline for using them runs out on Friday this week (30 June). 

The Energy Bills Support Scheme, which ran between October 2022 and March 2023, enabled households to save £400 off the cost of their energy bills over the course of the six months.

Whilst most households received this discount automatically via their energy supplier, traditional prepayment meter (PPM) users were required to redeem monthly vouchers sent to them by their supplier for use at either Post Office or PayPoint top-up points. 

Although the majority of vouchers have been redeemed there are still over £1m unclaimed vouchers in the city and the City of Edinburgh Council is calling on anyone with friends or family on a PPM electricity meter to make sure all eligible households benefit. 

The deadline for claiming fuel poverty vouchers was highlighted in a motion from Forth Green Cllr Kayleigh O’Neill at Full Council on Thursday 22 June.

Council Leader Cammy Day said: “We know there are many people in the city suffering from fuel poverty especially since the high levels of energy costs came into force. There is financial support out there for people on prepayment meters suffering from fuel poverty but the voucher scheme ends this Friday. 

“According to Ofgem 34% of eligible households in Edinburgh have not redeemed vouchers which is the equivalent of £1.3m of crucial financial help going to waste. I would really urge anyone on prepayment meters who hasn’t claimed their vouchers to do so in the next few days before the scheme ends.”

Claiming a voucher is simple. PPM users should bring their voucher, ID and energy prepayment key or card to the top up point specified by their energy supplier. Vouchers can then be redeemed in store immediately. 

Previously issued vouchers expire after 90 days but can be reissued before 30 June. If a person thinks that they have missed their vouchers, they should contact their energy supplier.  All vouchers must be used by 30 June. 

For more information, visit gov.uk/helpforhouseholds. 

Chancellor to end ‘prepayment meter penalty’

– Chancellor declares “prepayment meter penalty over from July”, cutting energy bills for over four million families.
– Families on prepayment meters will no longer pay more compared to people on direct debts.
– Follows support this winter which has already cut the typical household bill by almost half.

OVER FOUR MILLION families are set to save £45 a year on their energy bills from July as the Chancellor ends the prepayment premium.

Households on prepayment meters pay more on average compared to direct debit customers due to extra costs firms take on managing meters – such as supplying vouchers and collecting payments – being passed on to users.

The vast majority of households who rely on prepayment meters are typically vulnerable or low income, which means the higher tariff and inability to spread the cost is hitting those who can least afford it.

At his Spring Budget next week, the Chancellor is expected to announce fairness reforms to energy bills, bringing the bills of families on prepayment meters in line with average direct debit energy bill under the Energy Price Guarantee.

Chancellor of the Exchequer, Jeremy Hunt said: “It is clearly unfair that those on prepayment meters pay more than others. We are going to put an end to that.

“From July four million households won’t pay more than those on direct debits. We’ve already cut energy bills by almost half this winter, and this latest reform is proof again that we’re always on the side of families.”

Energy Security Secretary Grant Shapps said: “Charging prepayment meter customers more to receive their energy is a tax on some of our most vulnerable – this change will stop that.

“It’s even more important at a time Brits are faced with high energy costs and when we’ve seen vulnerable households wrongly forced onto them. While actions I’ve pushed for have meant forced installations are on pause, warrants aren’t being waved through and Ofgem is toughening up its reviews, our changes will make sure families aren’t penalised simply for how they heat their home.”

The change is expected to come into effect from July 1 through updates to the Energy Price Guarantee at a cost of £200 million.

From April 2024, when the Energy Price Guarantee ends, the Chancellor has tasked energy regulator Ofgem to report back on additional regulatory options to permanently end the premium and bring fairness to bill payment methods in the long term.

The move is the latest government intervention to help families with their energy costs after the average family bill was cut by £1300 this Winter.