Prepaid gas and electricity
Can you change from prepayment meter to Direct Debit? Plus what extra help is available
On 1 January, those who pay for their energy on a prepay meter will see their bills rise by 1% on average. If you're struggling to pay, there's help available. Here's what you need to know...
How do prepayment meters work?
Prepayment meters let you pay for your energy on a pay-as-you-go basis. About four million homes in Britain have them. You top them up online (if you have a smart meter) or via a key or card, which you buy credit for at newsagents, post offices and garages.
Typically, prepay customers have had access to fewer tariffs, but the big advantage of sticking with prepay is if you have problems budgeting.
Prior to the energy crisis, some people could cut energy bills by swapping prepayment meters for standard meters for free, but in July 2023 the Government committed to end the 'prepay premium', and prepay is now the cheapest way to pay if you're on a standard variable price-capped tariff.
Yet before you jump to it, a word of caution... there are rarely any prepay deals. All the big discounts tend to be thrown out to win new Direct Debit customers. So it's highly likely Direct Debit will stay by far the overall cheapest option for people who switch energy tariffs, but for those who don't, it'll be prepay.
Prepayment energy bills will rise by 1% on 1 January 2025
Regulator Ofgem's new Price Cap will come into effect on 1 January 2025, with prepay energy bills rising by 1% on average.
Under the new Price Cap, a typical household on prepay will pay £1,690 a year (currently £1,669/year). Yet what you pay depends on how much you use and where you live. To see how the Price Cap change will affect your bill, see our What will I pay from January? calculator.
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On a prepayment meter and struggling to pay? There's help available
With massive hikes in energy prices over the last two years, many households are struggling with bills right now. Citizens Advice estimates that 1.7 million people in Britain ran out of credit on their prepayment meter last year, and 800,000 people went more than 24 hours without gas and electricity, as they couldn't afford to top up. So make sure you are getting all the support you are entitled to. If you're worried about paying your energy bills – or you're already struggling – don't suffer in silence. There's lots of help out there.
- All suppliers offer small amounts of emergency credit. Usually £5 to £10 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.
- Friendly credit prevents you being cut off during certain times of the day or certain days of the week. If you start running out of credit when the shops are closed (for example during evenings, weekends and bank holidays), which stops you being able to top up, you won't be cut off.
- Many providers have hardship funds to help those in debt. Find out if you can get help through a supplier hardship fund.
What's more, regulator Ofgem has strengthened protections for prepayment customers, requiring suppliers to proactively identify and contact customers that have self-disconnected due to being unable to afford to top up. This includes support for repaying any outstanding standing charges.
For more info, see our full Struggling with energy bills guide.
Not already on prepay? Some households in energy debt can be forced to have one
If you're in energy debt, your supplier may be able to force-fit prepayment meters – but this should be the last resort to avoid disconnecting you, and your supplier should have explored all other options to recover the debt first.
Since November 2023, a new code of practice has been in place for forced prepayment meters, which all suppliers must abide by and is legally enforceable. It sets out the rules for when suppliers can and can't forcibly install a prepayment meter.
British Gas is the only major energy supplier to have not yet met the conditions under the new code to be able to restart forced prepayment meter installations. We'll update this guide if this changes.
Ofgem is reviewing customers that had a prepayment meter installed without permission
Regulator Ofgem's review has, so far, identified more than 2,500 customers that had a prepayment meter installed between 1 January 2022 and 31 January 2023, but shouldn't have. Energy suppliers are in the process of paying compensation to affected customers and the review is ongoing.
If you think your supplier installed a prepayment meter or switched your smart meter to prepayment mode when it shouldn't have, you should contact your supplier, as you may be entitled to compensation. If you need help making your complaint, you can contact Citizens Advice and Advice Direct Scotland. If you need extra support, your complaint can be referred to the Extra Help Unit or Energy Ombudsman.
Got an older, traditional prepayment meter? Check if you can get a smart meter
Most suppliers now offer smart prepayment meters – they're free and offer several benefits if you prepay for your energy:
- Smart prepayment meters make it much easier to top up. These meters allow you to top up online, by text, over the phone or via an app. So there's no need to pop to the shops when you're running low to add credit to your card or key.
- Suppliers can switch you between prepay and monthly direct debt remotely. You no longer need to have an engineer come out to your house and replace your prepayment meters with standard ones – suppliers can simply change it remotely. So if you are eligible and want to switch to a standard credit meter, this is done with a simple click of the button.
- You'll be more in control of your usage and spending. You'll be able to see it in 'real time' on your in-home display.
- It's much easier to check how much credit you have left. The in-home display will also tell you how much credit you have left, so you no longer have to go to the meter to check. Some suppliers also have mobile apps that can talk to your smart meter, so you can check on your phone.
To see if you can get a smart prepayment meter, contact your supplier, or for more info, see our Smart Meters guide.
Can you switch from a prepayment to a standard meter for free?
Most big energy suppliers – British Gas, EDF, Ovo and Scottish Power – will let you move from a prepayment meter to a standard meter for free. Some other suppliers also offer to do it for free, though some may charge, so always check first. If your supplier does charge, you can always consider switching to one that offers it for free.
To move off prepay, nearly all suppliers require you to have paid any outstanding debt on your energy account and be credit scored, so they can see if there's a risk you won't repay. Of the big names, only EDF says it won't credit check you, though it does require you to pay off any debt first. You can sign up to our Credit Club to get your free credit score and check your chances of being able to switch to a credit meter.
Check your prepay credit balance and take a final meter reading before being switched
If you do decide, and are approved to get a credit meter, make a note of how much credit you have left before your supplier installs your new credit meter or turns off your smart meter's prepayment setting. Your supplier should transfer any remaining credit to your new account, so it'll go towards your first bill as a credit customer.
If you owe your supplier money (for example from using emergency credit), make a note of this, as your supplier will add this to your first bill.
It's also a good idea to take a final meter reading, and take a photo of the meter, so you have proof of what it says.
Standard prepay prices are cheaper than Direct Debit – but you may still want to switch as fixed deals return
Under the current Price Cap, prepayment households on standard tariffs pay a typical £1,669 a year, compared to £1,717 a year if you pay by Direct Debit – about £48 LESS.
But the benefit of switching to Direct Debit is that those on standard credit meters generally have access to more fixed deals, which can sometimes offer savings over the Price Cap. So this may be worth looking out for as energy suppliers have started to bring back competitive fixed price contracts. Check our Should I fix? guide or try our Cheap Energy Club comparison tool to see what's currently available.
Or perhaps you just want to switch so you don't have to worry about topping up your meters – though make sure you pay by monthly Direct Debit, as paying on receipt of bills is much more expensive than prepayment.
Quick questions
Renting? You'll need your landlord's permission to switch meter
If you want to change from a prepay to a standard meter, then it's best to get written permission from your landlord first. 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, which suppliers may charge you for.
If you just want to switch suppliers, you don't need to get permission from your landlord to do this, but it's a good idea to let them know so they're aware, as it will affect future tenants. However, due to the energy market crisis, it's unlikely you'll be able to save by switching supplier right now.
Quick questions
Top tips if you have prepayment meters
If you can't switch away from a prepayment meter to save cash, then these tips will help you make sure you use prepay the right way.
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