LIGHTS OUT
What happens to energy prices if you’re on a prepayment meter?
Plus, we've explained what help you can get if you're struggling to pay your bills
ENERGY bills are still weighing heavy on people's minds and wallets.
Ofgem's price cap is currently £1,568 a year on typical dual fuel energy bill, which is the lowest level in two years.
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It means millions of households across Britain will be around £122 better off this year.
The previous price cap, which took place from April to June, was £1,690.
It is important to note that the price cap changes every three months, so there is a chance your monthly bill will rise again.
Also keep in mind, the £1, 568 figure is calculated based on what Ofgem thinks an average household will use.
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In July, a typical household that pays their energy bill will pay the following rates:
- 22.36 pence per kWh (for electricity)
- 5.48 pence per kWh (for gas
But it's important to note that the price cap is not a cap on the overall amount people will pay for their energy.
Instead, it caps the amount that customers pay per kilowatt hour, or unit, of gas and electricity.
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So if you use more energy than the average household, expect to pay more.
The price cap affects roughly 29million customers, including four million customers on prepayment meters.
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If you have a prepayment meter, you pay for your gas and electricity prior to use, by topping up a meter at a shop or online.
Households on prepayment meters continue to receive a government-backed discount to ensure that they aren't charged more than those who pay by direct debit.
The meters are often installed in homes that have fallen into debt or by landlords in some rental properties.
But you might also wonder what a prepayment meter means for your energy bills.
What will happen to prepayment energy bill prices?
Households on prepayment meters receive a government-backed discount to ensure they are not charged more than those who pay by direct debit.
This change was brought in on July 1, 2023.
Previously, the cost had been higher for people with prepayment meters due to the costs of up keeping the meters.
However, this was quashed in last year's Spring Budget, and it is now not anymore expensive to have a prepayment meter than to pay in arrears.
But if you're in debt with your supplier 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 is £10 for electricity 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.
Regarding 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%.
What can you do if you're struggling to pay for your energy?
You can take some measures if you're struggling to pay for your energy.
If you fall into debt, you can always approach your supplier to see if they can put you on a repayment plan before putting you on a prepayment meter.
This involves paying off what you owe in installments over a set period of time.
If your supplier offers you a repayment plan you don't think you can afford, speak to them again to see if you can negotiate a better deal.
Beyond this, several suppliers offer customers grants if they're struggling to pay energy bills.
A grant is a sum of money you don't have to pay back, so it's essentially free cash.
British Gas, Scottish Power, Ovo Energy, E.On, E.On Next, EDF, Octopus Energy and Shell Energy offer grants.
Plus, thousands of vulnerable households are missing out on extra help and protections by not signing up to the Priority Services Register (PSR).
The service helps support vulnerable households, such as those who are elderly or ill, and some of the perks include being given advance warning of blackouts, free gas safety checks and extra support if you're struggling.
Not everyone is eligible for the Priority Services Register. Your energy firm must deem you to be vulnerable.
This could apply to you if you:
- Have reached state pension age
- You are disabled or have a long-term medical condition
- You are recovering from an injury
- Have a hearing or sight condition
- Have a mental health condition
- You are pregnant or have young children
- You need to use medical equipment that requires a power supply
There could be other situations where you're eligible too, like if you need short-term support after a hospital stay.
For full details on eligibility, visit Ofgem's website.
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Get in touch with your energy firm to see if you can apply.
you find yourself in debt the government has a number of support measures.
What to do if you are in debt?
IF you live in England or Wales, you can apply for Breathing Space (also called the Debt Respite Scheme).
This is a temporary protection period, to give you time to get debt advice and set up a solution. It means that for up to 60 days:
- your creditors (the people you owe money to) will have to stop trying to collect your debt
- your creditors will have to freeze most interest, fees and charges on your debt
- your energy supplier cannot install a prepayment meter without your permission, and cannot collect any debt using your prepayment meter
If you live in Scotland, you can apply for a debt moratorium.
During this temporary protection period, your creditors will not be able to take any action to recover what you owe them.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected].
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