- 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 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 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.
