A guide to pre-payment meters

Whether you use electricity, gas or both, there are a few ways to pay for your energy. Around 5.9 million households in the UK are using pre-paid energy. So here’s what you need to know about pre-payment meters and what they might mean for your energy bill.

Peter Earl From the Energy team
minute read

Who would use a prepaid meter?

Prepayment meters are sometimes suggested to help people who’ve had problems paying off their energy bills in the past, as they can help with planning payments.

The prepaid meter can also be used to help repay debts to your energy supplier. So, for example, £20 added to a card can pay £5 towards the old debt and £15 for new energy, once you put it in the meter.

Some landlords also choose to fit them in rental homes, to avoid unwelcome bills with interest when tenants leave a property.

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What is the prepayment price cap and how does it apply to prepayment meters?

In 2017, Ofgem introduced a prepayment cap, also known as a ‘safeguard tariff’, which is updated on 1 April and 1 October each year. It limits the amount the supplier can charge you per kWH of electricity or gas. Suppliers can't charge you more than the cap amount for each unit of power that you use. The cap’s purpose is to prevent UK households from overspending on energy.

The cap limit applies if you:

  • Use a prepayment meter to pay for your gas or electricity in advance (including through a token-operated meter)
  • get the government’s Warm Home Discount and are on a standard variable tariff or tariff you haven't chosen – sometimes known as a default tariff.

The supplier must automatically make sure the cap prices apply – you don't have to apply for any reduction. The cap scheme is expected to run until 2020 with the price level being adjusted every six months.

Does having a prepaid meter make energy cheaper?

Unfortunately, no. Prepaid meters are often put in place for those struggling to pay for their energy, and the tariffs tend to be higher than with a standard meter.

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But can I still save money on a prepaid meter?

Yes, you can. Most energy providers will have at least one prepaid tariff on offer. This means it’s still possible to shop around for a good deal.

Take a look at our energy saving tips for more ways to save on your energy bills.

Can I change my meter?

Yes. If you inherit a prepayment meter through a house move, contact your energy supplier to tell then you’re the new owner. You should then be able to change your meter if you want to – though they may run a credit check as part of the direct debit process.

And if you’ve had problems with bills in the past but you’re back on your feet, you might be able to switch from a prepaid to a regular meter too. This will be subject to a credit check and, often, on the condition that your account is 100% debt-free.

Finally, check whether your energy supplier charges to change a meter. Some do and some don’t, so it might be worth shopping around if there’s a charge involved.

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