Prepayment meter warning: Britons forced onto 'expensive' choice as tough winter looms

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Experts have issued a dire warning as a record number of Britons have been moved onto prepayment meters while millions struggle to pay their energy bills. In a “worrying” new trend, the number of prepayment energy meters in the UK has soared by 60,000. Households which have such meters installed pay for their gas and electricity before they use it, on a pay-as-you-go basis.

This is done by buying credit, usually with a key or smart card, and adding this to the meter. As you use gas or electricity, the credit on the meter is used up.

This form of energy payment is generally considered to be more expensive. According to the Money-Saving Expert, this is because they are more effort for the suppliers.

Their site says: “Providers prefer to get regular, automatic payments for your energy, which is what you get with direct debit payments on standard credit meters. This is why it’s the cheapest way of getting your energy.”

Since the middle of 2019, the number of households using prepayment meters has dropped steadily for nine consecutive quarters, plummeting from 7,837,471 in the second quarter of that year, to 7,320,329 in the third quarter of 2021.

However, since then the number of prepayment meters being used jumped back to 7,380,697 in the first quarter of this year, marking an increase of almost 60,000 in six months.

If these trends continue, around 10,000 meters could be switched to prepayment each month, meaning 30,000 more households could be paying using this method by the end of the year, The i report. 

Often, households who struggle to pay their energy bills are moved onto prepayment meters, as these need to be regularly topped up, preventing billpayers from falling into deeper arrears on their gas and electricity bills.

This comes as new data has revealed a staggering two million households have been in debt over their energy bills during the second quarter of this year. As household bills have hit new highs every few months, a record number of Britons are in arrears over their electricity payments. 

The ever-growing fossil fuel energy crisis has placed Britons in a precarious position, as data from the energy regulator Ofgem has revealed that at the end of June, 2,347,511 households were behind on their electricity bills and 1,858,585 on their gas bills. Within just three months, both figures have risen by about a quarter, and by nearly two-thirds since the end of 2020.

One major disadvantage of a prepayment meter is that the daily standing charges continue to pile up, even when households do not use energy. As a result, when customers top up their prepayment meter, they find their credit swallowed up paying these standing charge debts.

READ MORE: UK facing energy crisis horror as millions of Britons trapped in debt

Overall, these standing charges cost Britons on average £50 more every year, when compared to an equivalent direct debit customer, owing to the cost of the extra infrastructure needed to accept payments.

Richard Neudegg, director of regulation at Uswitch, said: “The rise of prepayment meter numbers is a worrying reversal of a trend after nine consecutive quarters falling – suggesting households are becoming increasingly at risk this winter.

“With energy prices set to rise again in April, this is a warning of things to come and we will most likely see more and more households moved to prepayment meters in the coming months and years.

“Families and individuals on pre-payment meters will be plunged into darkness as they self-disconnect when they can’t afford to top up.

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“We want the Government to ensure that vulnerable consumers on prepayment meters are considered the higher priority for additional support beyond April 2023, when the energy price guarantee changes.”

Last month, Citizen’s Advice reported seeing a record number of people who could not afford to top up their prepayment meter, making it the eighth time this record has been broken in the last nine months.

Mr Wild said: “Even with the temporary bill freeze in place, the cost of energy will still be at a record high. This crisis isn’t going away.

“By the end of September, we’d already helped more people with energy issues than we did for the whole of last year with an unprecedented amount who just can’t afford to top up their prepayment meter. The Government must think carefully before it acts so we don’t see even higher numbers at crisis point in April.”



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