Friday, February 20, 2015
In the first of our posts on electricity and gas prepayment meters we discussed what they were, what they are for and their comparative costs relative to the cheapest tariffs offered by the Big Six. In this Know-How post we will go into a bit more depth about the costs of a prepayment meter and what actions you can take if you have one.
Why is a prepayment meter more expensive?
You might be wondering why prepayment meters are so expensive, if they are intended to be used by households that may struggle to pay their bills. There are several reasons:
- As we discussed in the last prepayment Know-How piece the unit price of electricity is more expensive for prepayment customers with all of the Big Six energy companies. Additionally, you will also be charged a daily fee for your meter, even if you don’t use any energy.
- Energy suppliers like post-pay customers and those paying by direct debit, hence why they offer discounts and the best deals to these customers. When I say ‘like’, this is not a judge of character, but from a business perspective. They ‘like’ the regular and dependable payments of direct debits from these customers as it improves cash flow within the business. Prepayment customers are more likely to pay for their energy as and when they need it, more in the winter and less in the summer.
- Prepayment meters and tariffs involve more companies, each wanting to make a profit. If you consider the amount of companies involved, it is more complex than postpay customers dealing with their energy company directly: the local shop (PayPoint) where you top up, PayPoint itself for processing the transaction, the companies maintaining the meters, and the energy company itself.
I have a prepayment meter, can I switch to a credit meter?
Yes…potentially. My response to this question is affected by your specific circumstances. If you are in rented accommodation, there may be a clause in your tenancy agreements that prevents you from changing the meter. If you would like to switch from a prepayment meter to a credit meter, which would allow you to access some of the cheaper tariffs we found you need to contact your current energy supplier. It is likely they will undertake a credit check, and you would usually need to have a bank account and to have cleared any outstanding debts on your current meter. It is hard to provide exact details, as each supplier will have slightly different conditions.
From the price comparisons presented in our previous post it would seem obvious that by switching to a ‘credit’ meter you would save money. However, if you are unable to switch to a credit meter, you can keep your prepayment meter and still save money by switching supplier to a cheaper tariff. The savings we outlined for the various prepayment meter tariffs are indicative and you should undertake your own price comparison using information and meter specific to how you use energy in your home.
I need more help and information?
If you are struggling to pay for your energy, one of the best things you can do is contact your current energy supplier to ensure you are on the most appropriate tariff. You may also be eligible to receive the Warm Home Discount, a rebate on your energy bills. The Warm Home Discount offers money back to eligible households on low-income, especially those with children, or if you receive the Guarantee Credit element of Pension Credit. It is important to understand that if you are not a pensioner receiving Guarantee Credit you may not automatically be enrolled. Eligibility for the discount varies by supplier, so it is best to get in contact with yours directly.
If you do not feel comfortable contacting your energy supplier for advice you may consider contacting Citizens Advice either directly or through their website.
This post has been a more in-depth look into the world of prepayment meters. There is still lots more to explore about prepayment meters and I am sure we will come back to this topic soon to answer more of your questions. Do you have a prepayment meter installed? If so, how do you find them? Share your stories in the Forum to help others.
Remember that in the meantime you can ask us any questions on Twitter and Facebook. Follow us for all the latest site updates, and don’t forget to share this story with your friends so we can help even more people with their energy questions.
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