Do prepayment meters really give you more control?
Around four million households have prepayment energy meters. People add money to cards or keys at local shops or Post Office counters and use these to top up their meters. Smart prepayment meters can be topped up online or through an app.
Both prepayment and credit meters on standard variable tariffs are capped, this is called the The Ofgem price cap – but did you know that the cap for those on pre-payment, pay-as-you-go electricity is higher, and that on many pre-pay tariffs the unit cost for the energy is also more. You will often also be charged a higher standing charge due to additional admin work required to maintain your meter.
There are many reasons why families pay for their electricity via prepayment, it could be something they have always done, it could be that a prepayment meter was enforced due to debt – either way it can be hard to change the way you pay.
Have you thought about making a change?
By switching to a credit meter you will have access to cheaper electricity and standing charges and just like a pay-as-you go electricity with the addition of a smart meter you will only be billed for the energy you use.
On a credit meter you will pay a fixed amount each month, this is set by your energy provider based on your historical energy use or predicted use if you’ve just moved in. They will take into account your annual usage and then split it equally over 12 months - this means that there are no sudden surprises in the winter months when you are using your heating more. Your supplier will review your payment periodically and if you use more or less, they’ll notify you of any changes.
Knowing what your monthly payments will be from month to month can help when budgeting for the family and if you are struggling to pay there is help available – by having a credit meter you will be direct receipt of any government schemes available without having to top up a card.
So, whilst pre-payment meters really do put the control in your hands via a top up card, they are also more expensive, and you run the risk of self-disconnecting if you forget to top up and run out of credit. As you're paying for what you use, you will have to cover much higher bills in the winter months. This can make budgeting really difficult as your energy costs could be 2-3 times higher than in the summer.
Credit meters allow you to understand your energy use, charge you a set amount per month throughout the year, by paying monthly, you pay the same all year round and the credit reserve you build up in the summer goes towards the winter. You will then only pay more if you use more energy than historically, or that the supplier predicted. Providing you with peace of mind knowing you will not run out of credit in one of our many freak cold snaps!
You can find out more about smart meters here.