Energy prices are on the up and prepaid customers are no different. Yet because you don’t have the options others do, the strategy for dealing with the price hikes is different.
Prepayment meters are energy meters for gas and electricity that allow you to pay for your energy on a pay-as-you-go basis. Over four million UK homes use them.
You top up your energy via a key or card, which you can credit at newsagents, post offices and garages or sometimes online. While they can help to budget, you usually pay more for energy.
The big six have hiked prices - time to switch?
Energy price hike update: Eon's price hike means all of the big six energy providers have now upped prices. The increases will all hit prepay customers.
See a full list of energy companies' most recent price moves.
Here's the lowdown on how suppliers have hiked prices most recently and in the past. Ofgem figures show typical bills have risen 26% (£275) during the past five years.
Latest price changes
2013/14 rises by provider
Price changes vary not just by company, but by region, so there can be huge variations. The following are the most recent average changes for each major supplier.
Remember that when you compare energy prices, if price rises have been announced but are yet to come into force, you'll get the 'after-rise' price. This is because comparison services incorporate new costs as soon as they get info from suppliers, not when they actually happen.
- Scottish & Southern Energy (SSE). 8% gas hike, 8% elec on average. Incl Swalec, Southern Electric, Scottish Hydro and Atlantic. (All from 15 Nov 2013.)
- Ebico. 10% gas hike, 9% elec hike on average (will take place 15 Nov 2013).
- Eon. 4.6% gas hike, 3.7% elec hike on average (from 18 Jan 2014).
- British Gas. 10.4% elec hike, 8.4% gas hike (will take place 23 Nov 2013).
- Npower. 10.3% gas hike, 9.1% elec hike on average (from 1 Dec 2013).
- Scottish Power. 8.3% hike across prepaid gas & elec on average (6 Dec 2013).
- EDF Energy. 3.9% gas hike, 3.9% elec on average. (All from 3 Jan 2014.)
What prepaid customers should do
Here are the options:
Switch prepay tariff. If you're on a standard prepay tariff, you're probably overpaying. Compare now and there's almost a level playing field.
Yet most comparisons don't factor in the Government's £50 green levy cut yet (see Green levy reforms MSE news story). So do a comparison, and switch now if you'll save big. If it's a small difference, consider waiting till the changes are incorporated.
If possible, get a free standard meter. A normal meter (where you get bills) is cheaper, so first try to convert or switch to a provider that'll do it for free. Be aware of the budgeting difficulties - some suppliers charge for credit meters.
Fix your prepay price. Sadly, you can't get the top fixed deals if you're on a prepay meter. There is an option to fix with prepay, but only with two British Gas deals and the limited competition means it's far from cheap.
See more details
British Gas Fix Mar 2016 Prepayment: This is the longer of the two British Gas prepay fixes and the main one worth considering.
It promises no hikes for three winters, until 31 March 2016. For someone on a typical prepay bill, it’ll cost £140 more - so this is a hefty premium for fixing to get price surety.
The other downside is it also comes with big £50-per-fuel exit fees. With the Prime Minister mooting he may shift the goalposts and move the cost of green measures away from energy bills, there’s a small chance prices will get cheaper. If that happened, you'd be stuck on a pricier tariff.
This fix could still be an option because if energy prices do rise as much as predicted, because it’s a long fix, it has a chance of being the cheapest route.
If prices rise by 20-30% over the next few years, it could turn out to be a good deal. However, only a crystal ball can truly tell you.
To see how this deal stacks up, you can compare on MSE's free Cheap Energy Club. Click the 'fixes' tab.
You can switch and save on prepay. Our Cheap Energy Club tool makes switching as easy as possible and helps you get no-hassle, permanently cheap gas and electricity. All you need to do is tell it where you live and how much energy you use. Then we'll tell you if you're overpaying on your current deal or if there's a cheaper alternative.
But the best bit is we'll keep monitoring your tariff for you every month to ensure you're always on the best deal. Plus if we can switch you, you get £30 cashback.
As above, most comparisons don't factor in the Government's £50 green levy cut yet (see Green levy reforms MSE news story). So do a comparison, and switch now if you'll make a big saving. If it's a small difference, consider waiting till the changes are incorporated.
Cheap Energy Club doesn't work perfectly for those that have one credit meter and one key/card meter. If that's you, it may be easier to use the comparisons below.
- Overall top comparison service. £15 cashback per switch
Our top pick, based on historical reliability, feedback and research, is Energyhelpline*, which pays £15 cashback (once) per switch whether separate gas and electricity or dual fuel.
- Alternative top picks for freebies. £30 cash, £35-40 wine
For a dual fuel switch - getting gas and electricity from one provider - you can get bigger freebies (one per household). Yet don't assume dual fuel is always cheapest. Check whether getting separate gas and electricity can undercut it, as it often can.
£30 cashback: MoneySupermarket*
6 bottles of wine (worth c.£35-40): uSwitch*
By specifically clicking via these special MoneySavingExpert.com links to get to the comparison sites and not going direct, you also get paid the cashback or freebies on top, provided they can switch you (why they pay). It's usually paid in 45-90 days.
Remember you can still switch if you are in debt with your supplier. This debt will follow you to the new supplier.
If you've less than £500 debt, you can still switch supplier.
Renters have a right to switch too
If you rent your home, you can also save £100+ a year by switching. You don't need to own the property to do it, so don't just stick with the previous tenant's gas or electricity firm.
When renting, you're free to switch, providing you pay the energy supplier directly (rather than paying your landlord).
You should also check your tenancy agreement - but even if your contract bans switching, Ofgem’s guidance on this states that if you pay the energy bill, you’re still entitled to change supplier at any time. You can still compare on Cheap Energy Club, even if you don't have the former occupants' bills.
We'd love to hear your experiences of switching as a renter on the Switching when renting forum discussion, especially if you've challenged your landlord.
If you're a renter, here's some more info on your switching rights.
Pay the energy company directly? You CAN switch supplier
This is because you have a contract directly with the energy supplier. You don't need to get permission from your landlord to do this, but it's a good idea to let them know in writing so they're aware. It is worth checking your tenancy agreement just in case it is a breach. If it is, talk to your landlord.
My tenancy agreement says I can't switch, help!
Even if you pay energy bills to the supplier, but your tenancy agreement says you can't switch, challenge it. Preventing a tenant from changing energy suppliers may be viewed as an unfair term in a tenancy agreement. Get in touch with Citizens Advice to see if it can help.
If there's a default supplier clause in the tenancy agreement - where a landlord has a tie-in with a particular supplier - Ofgem says you can still switch.
Ofgem’s guidance states: “If a tenant is directly responsible for paying the gas and/or electricity bills, they have the right to choose their own energy supplier and the landlord or letting agent should not unreasonably prevent this.” See the Ofgem website for more.
Landlord says you can't ditch supplier? Try a cheaper tariff
If your landlord won't budge, and you don't want the hassle of challenging it, ask if you can be switched to a cheaper tariff with the same energy supplier. If the landlord allows this (here's hoping they will), you'll start paying the cheaper prices the same day you switch.
You may be able to switch from a prepay to a standard meter
If you've got a prepay meter and you're renting, you can still switch your energy supplier, providing you pay the company directly (check your tenancy agreement too - though if it says you can't switch, challenge it).
If you want to change the meter itself (perhaps you're changing a prepaid to a standard meter), then it's best to get written permission from your landlord first.
This is because it could be seen as changing the property from its original condition, unless you arrange to change the meter back at the end of the tenancy. The supplier may charge to do this (see below) so check first.
You may be eligible for free insulation or a free boiler
Tenants can also get free insulation and boilers, as long as they meet suppliers' eligibility criteria and have permission from their landlord.
You may be able to qualify if:
- You get tax credits and have a household income of less than £15,860 OR
- You receive income-based benefits, such as pension credit or income support, and you’ve either, children, a disabled person in the household or are over 60. Full help in the Free Insulation and Boilers guide.
The very cheapest energy tariffs are online deals for those who have credit meters, or normal, standard meters, in other words. These meters measure your usage, then you receive a bill or pay by direct debit afterwards, giving you credit rather than making you pay in advance.
- Typical average prepay meter cost: £1,400
- Typical cheapest prepay meter cost: £1,300
- Typical cheapest credit meter cost: £1,120
Correct as at November 2013. Based on average consumption for a typical house using a'medium' amount of energy.
You'll often hear "prepay users don't pay more now" - that's compared to bog-standard tariffs with normal bills. Standard meters offer a wider choice of tariffs including cheap online deals, direct debit discounts and more. It's simply a more competitive marketplace.
Things are better, but it's still an outrage some with prepay are among society's poorest. Others use the least energy, yet pay more. If you can, ditch and switch to a credit meter.
Before you take the plunge and consider switching to a credit meter, bear in mind:
You may be credit-checked
Providers usually fit prepay meters because they think you're a credit risk. If you're moving into a property with a prepay meter, but have a good credit history, it should be easier to ditch it.
If it was fitted because of payment problems, you'll need to prove your creditworthiness. Any external credit checks via credit agencies will appear on your credit file and may affect future applications. See the Credit Rating guide for full info and tips on how to improve it.
A new meter might cost
Some providers charge up to £60 for swapping to a credit meter. Your savings from moving can be around £180, so should offset the cost eventually, but of course it may mean finding the cash in the short term.
If you're renting, you need to check with your landlord
If you're renting, you can switch your supplier to save, providing you pay the energy company directly and it isn't banned in your contract (you may be able to challenge this).
But if you want to change the meter itself (perhaps changing a prepaid to a credit meter), it's best to get written permission from your landlord first.
This is because it could be seen as changing the property from its original condition, unless you arrange to change the meter back at the end of the tenancy. The supplier may charge to do this, so check first.
You may have to pay for the meter if you change supplier
The provider may charge you for the free meter if you switch away to a different supplier before 12 months, so it can recoup its costs.
It can't dictate which tariff you opt for though, so make sure you switch to its cheapest tariff (online tariffs are usually cheapest - see Cheap Gas & Elec for more info).
It's easier to get into fuel debt on a credit meter
Prepayment meters have the advantage of budgeting. You know what you're spending, when you're spending, and it's an incentive to keep energy usage down. While for most the savings from lower rates will outweigh this, it's worth thinking about it before attempting a switch.
How to get a credit meter for free
If you think a credit meter is right for you, follow these steps.
Find out how much your provider will charge to ditch your meter
As you can see from the table below, some suppliers remove prepay meters and install bill meters for free if you meet their requirements, so it's always worth asking. Though almost always, you'll need to have paid any existing debt off.
|How much does your existing provider charge for a meter?|
|Energy supplier||Meter cost||What are the requirements?||Do you have to stay with the supplier?|
|Free||An account review and external credit check. You must not be repaying a debt on your meter, or have had a debt at your current/previous address in the last 12 months. You must not have failed a credit check in the last 12 months, and you must have three years of UK address history.||No, and you don't have to pay for the meter, even if you switch to another supplier shortly after the swap.|
Can be free, so ask.
|Your account history is reviewed to ensure you won't build up debt. You need to have been clear of debt for 12 months.||No.|
|Your ccount history is reviewed to ensure you won't build up debt. A credit check is also done. It may ask for a deposit which will be returned in 12 months, with interest.||No.|
|A credit check and an agreement to set up a direct debit.||No.|
|Free||No credit check.||No.|
|Free||An external credit check.||No.|
|Correct as at November 2013|
NOTE: All info is confirmed with the suppliers but switching to credit meters is at their discretion, so please tell us about your experience in the forum discussion.
In receipt of benefits or have a medical condition?
If you haven't been able to get a credit meter for free and fit into either of these two groups, it may still be possible to swap.
Get certain benefits? A Government scheme, Fuel Direct, lets you pay your bills directly from your benefit allowance. To be eligible for the scheme you have to be be in debt to your energy supplier for £71 or more, and receive certain benefits (see the website for these).
A set amount of £3.60 can be deducted to cover arrears, and an extra amount would be taken on top of this to cover your current consumption. Energy suppliers may agree to remove a prepay meter if you agree to sign up to Fuel Direct. None have confirmed this and they say it's decided on a case-by-case basis, but it's worth trying.
Medical condition? According to Consumer Focus, if you have mobility problems or if you are reliant on electricity for medical reasons, eg, to run breathing apparatus, you may be able to get your prepay meter removed.
Threaten to leave if it isn't free
If you've passed the credit checks which should, in theory, make you a desirable customer, but are still being asked to pay for removal of the meter, threaten to switch to another prepayment meter provider. Some suppliers may waive the charge to keep your custom.
Move to a provider that will give you a credit meter for free
If you can't get a free meter from your own provider, consider switching to get a prepay tariff with one of the suppliers that does offer free credit meters.
However, Ofgem rules state that if you have more than £500 debt with a supplier, you can be stopped from switching.
Remember, there's no guarantee that if you do switch to another company, it will then allow you to get a credit meter. So if you're going to do this, use the chart above in conjunction with finding a cheap prepay provider. This will make sure you won't end up paying a lot more on prepay if you don't ditch the meter.
It may be best to wait a few months to build up your history with the company.
Ditched your prepay meter? Tell us how it went!
Is it worth paying for a credit meter?
If you've tried everything to get a free credit meter and can't, it still may be worth paying, though it's NOT worth getting into debt for.
The cheapest prepayment meter tariff costs, on average, £1,300/year. Yet the cheapest tariff for credit meter customers is currently around £1,120, a saving of around £180. Balance the saving with the cost of swapping meter to help you decide.
As a rough rule of thumb, if you'll live there over two years and you're not struggling financially, it can be worth paying for a credit meter.
Never had a credit meter before? Quick tips
Credit meters are usually cheaper than prepayment meters, but it takes more effort to stay on top of bills. When you switch over, make sure you do the following:
Once you've switched, ensure you're on the cheapest tariff
Don't assume you're on the cheapest tariff. In fact, it's likely the energy company will put you on a costly one. If you have to stick with one supplier to avoid paying for the meter, speak to it to ensure you're on the cheapest tariff. Or do a comparison looking only at that provider.
If not, then you need to do a full market comparison - the overall winner depends on where you live and how much energy you use. To speedily find it and get cashback, see the full Cheap Gas & Elec guide.
Every time you receive a bill, do a meter reading
Don't rely on your energy provider's estimates, these are often way out. If it's under-billing, you'll have a big whack to pay at the end of the year. If it's over-billing, then it's unfairly got your cash.
If your direct debit is way off kilter, call up and request it's changed. You have a range of rights to ensure it's correct. See the full Energy Direct Debits guide for template letters to help.
Paying by direct debit is much cheaper
Pay by direct debit and it means you won't miss any bills. Plus you can get up to a 6% discount, though make sure you send regular meter readings as above so the direct debit is set at an accurate amount.
If you're struggling to pay, speak to your provider
Three providers offer an Energy Trust scheme for their account holders in hardship, to help cover energy arrears and sometimes other essential household items.
Essential items are covered by Further Assistance Payments and can include white goods, boiler repairs or funeral costs. Those who live in a home supplied by the provider, but are not account holders, can only apply for Further Assistance Payments.
You need to complete a full income and expenditure budget sheet along with proof of your income, give details on how your arrears have built up, eg, due to illness or redundancy, and say how the grant will help you.
Energy suppliers are obliged to help those in hardship. In the past, this was in the form of a social tariff, offering a discount off standard prices. This has been replaced with the Warm Home Discount, which came into force in April 2011.
It requires suppliers, by law, to help vulnerable customers pay for energy. It's mainly aimed at those who get pension credit. Suppliers also offer it to a wider group, although this is at their discretion - so call up and find out what your supplier will offer you.
Those who are eligible will get at least £135 towards bills from their energy supplier.
Use less energy. It's not just who you pay, but how much you use. Cutting energy is a mix of big and little things.
Turn down the thermostat and wear jumpers, turn lights off when you leave a room, use energy-saving light bulbs, defrost the fridge and check it's not on too high, don't leave electrical goods on standby.
For more info, read the Energy Saving Hunt discussion and see the Energy Saving Trust website.
Don't use emergency credit too often. Most suppliers provide around £6-10 emergency credit after your top-up runs out. But when you dip into the emergency credit it doesn't charge you the standing charge (the fixed charge you pay daily just to be connected), so the next time you top up you have to play catch-up, which can throw your budgeting out.
Going away? Make sure you top up enough. If you're going away, you need to leave enough credit on the meter to cover the daily standing charge, even if usage will be low. Otherwise you may find your credit runs out and appliances switch off while you're gone.
Moved house? Tell your supplier immediately. If you've moved into a home with a prepayment meter, tell the existing supplier immediately and don't use the old tenant's top-up card.
Otherwise you may end up having to pay someone else's debt just to get an energy supply. The supplier must, under a code of conduct, reset the meter as soon as reasonably possible.
Ignore doorstep sellers. There's been a recent scam involving doorstep sellers selling fraudulent top-up cards. The cards which are normally sold in £50 denominations for the price of £25, don't work and so it's totally wasted cash.
- Prices are going up, so look at topping up now. This depends on your provider. But with British Gas, for example, the price charged by the meter won't increase until the first time you top up after the price hike. Anything you use before that first top-up will be charged at the old rate. As there is usually a maximum top-up, the benefit of this will be limited.