What happens to energy prices if you're on a pre-payment meter? | The Sun
ENERGY bills are currently capped at £2,500 a year but what happens if you have a prepayment meter?
The energy price guarantee is set at £2,500 a year for a typical household until the end of this month.
It was set to be extended from April and rise to £3,000 a year but Chancellor Jeremy Hunt is expected to cancel the increase in tomorrow's Budget.
Either way, the £2,500 cap is just on what firms can charge customers. Your bills could still be higher depending on usage.
But some smaller households might see their energy bills come in lower than £2,500.
Around 4.3million UK consumers also use a prepayment meter, according to Uswitch.
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If you have one, you pay for your gas and electricity before using it by topping up a meter at a shop or online.
They are often installed in homes that have fallen into debt or by landlords in some rental properties.
A pay as your go meter is not as good value as having a credit meter, but some people find it helps them plan their spending and avoid surprise bills.
But you might also be wondering what having a prepayment meter means for your energy bills.
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What will happen to pre-payment energy bill prices?
Those on prepayment meters often end up paying more a year for their energy bills than those paying by direct debit.
That's because the cost of setting up and maintaining prepayment meters is higher for suppliers.
Altogether, an estimated 300,000 households on prepayment meters face having debts deducted when they top up – instead of the cash going towards vital heating and lighting.
If you're in debt and on a prepayment meter, the amount you owe can be deducted when you next top up.
How much of the top-up goes towards paying off the debt depends on your energy company – but it can be up to 100% in some cases.
That leaves people with less money to spend on their current energy needs including heating and lighting.
All the major energy companies including British Gas, Eon, EDF and Scottish Power can take up to 100% off a top-up to cover electricity debts.
For example, if your agreed weekly debt repayment amount of £10 for electric and you top up £10, the firms will put the full amount towards your debt and leave you nothing for current usage.
The exact proportion of a top-up that goes on paying back debts will depend on how much a customer has agreed to repay and how much they are topping up.
When it comes to gas debts, the maximum deduction is 90% for British Gas prepayment customers.
Eon, EDF, Octopus, Ovo and Scottish Power deduct up to 70%, while the maximum deducted by Bulb is 30%.
It comes after The Sun called for a temporary ban on moving struggling energy customers on to meters.
What should I do if I can't afford my debt repayments?
Ofgem, which regulates the industry, has clear rules energy firms have to follow if they can't afford their debt repayments.
The first step you should take if you're struggling with payments should be to contact your supplier.
They have to work with you to agree on a payment plan that's affordable and within your budget.
If you're already on a debt repayment plan and can't afford that, you are can bring this up with your supplier and review it.
If you don't know who your supplier is, you can find out on Ofgem's website,
You can ask your energy supplier for:
- A review of your payments and debt repayments
- A payment break or temporary reduction
- More time to pay
- Access to hardship funds
You can always ask for a one-off fuel voucher from your energy supplier if you're on a prepayment meter too.
This is a code sent to you via post, email or in a text message which you can use to top up your meter.
What happens if your pre-pay supplier goes bust?
If your energy supplier goes bust, don't panic as your energy supply won't be cut off.
Nor will you lose any money if you have already recently topped up.
Instead, the energy industry regulator Ofgem will find a replacement supplier for you.
Justina Miltienyte, energy policy expert at Uswitch, said: "If you are on a prepayment meter and your supplier goes bust, don't worry, you will still be able to top up and your credit will be protected.
"The new supplier would get in touch to let you know of any changes in payment arrangements."
Experts like Martin Lewis' MoneySavingExpert have previously advised customers not to rush to switch if their existing supplier goes bust.
Instead, consumers should "simply sit tight and wait to be contacted by a new supplier".
But it is recommended that you take a meter reading ready for when your new supplier contacts you.
Other charities also recommend keeping old energy bills and waiting until your new supplier is appointed before cancelling any direct debits.
What help can you get with your energy bills?
Charities such as StepChange, Citizens Advice and Turn2Us can help people struggling financially.
A number of energy firms offer customers grants if they are struggling with their bills too.
That includes British Gas, Scottish Power, OVO Energy, Shell Energy and Octopus Energy.
You can also get help via the Household Support Fund, which was recently extended by the government.
The fund is a central pot of money which has been shared between councils in England who then decide who to offer help to.
But, in most cases, it's offered out to households on benefits or a low income.
Some councils are handing out free money as bank transfers and others as energy bill vouchers.
You should check with your council if you think you might be in line for help.
You can find out who your local council is by using the council locator tool on the government's website.
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Here's a quick roundup of charities that can help out if you need free and impartial advice.
- StepChange: 0800 138 1111
- Citizens Advice: 0808 223 1133
- National Debtline: 0808 808 4000
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