Pre-payment meters vs Standard Credit meters: Pre-payment customers collectively overpaying £390 million a year on energy bills

What’s a prepayment meter?

A prepayment meter is what the name suggests, a customer pays in advance for the electricity and gas they use via either a token, key or card that is topped up with cash. When energy is consumed credit is taken from the card. It works the same as a pay as you go phone.

Many rental properties contain this type of meter due to often unjustified concerns from landlords that their tenants won’t pay their bills even though they are by far the most expensive method for someone to pay for their energy usage.

Customers who do fall behind on their bill payments may be put onto such meters and the amount owed taken out of the credit.

They can also be a pain for customers who don’t live close to a retailer that allows the top-up of credit and especially bad for those with mobility issues or the elderly who cannot travel far.

However, despite that, some people may prefer them as they allow full control over how much they spend on energy and are useful if trying to manage a tight budget.

The new research has revealed that the cost differences between prepaid meter tariffs are significant especially for consumers on low incomes. The 64% of prepayment customers on a standard variable tariff are paying an average annual cost of £1,195, £39 more than a non-prepayment meter standard variable tariff.

When should energy suppliers recommend prepaid meters?

There are a few scenarios where an energy supply company should recommend prepaid meters to their customers, these include:



• If the customer is regularly missing payments and building up debt. By putting them on a prepaid meter the energy supplier can better manage their debt repayments.
• A prepaid meter can be preloaded with the debt allowing the customer to repay some of it every time they top up their meter.
• A customer who wants strict oversight on their energy spending will benefit most from a prepayment meter as the amount spent on energy consumption is entirely up to them.

Alternatively, energy suppliers should assess their usage on a case by case basis. Prepaid meters should not be given to vulnerable people, those with health problems or those who rely on their energy supply to keep them healthy and protected.

Gas and electricity companies cannot cut off a customer’s supply unless they have first offered them a range of payment methods to help them pay. They must only disconnect a supply as a last resort, and they must give the consumer proper notice first.

What’s a standard credit meter?

Most customers are now on credit meters that record gas and electricity usage and then charges them on either an estimated or accurate basis, depending on when a meter reading was taken.

The main benefits of using such a meter are that tariffs tend to be more generous and better value for money.

The benefits of a credit meter include:

• They are usually cheaper than prepayment meters, with a variety of different tariffs available, meaning there’s a good chance a consumer can save money by switching supplier.
• You can pay for your energy in several ways and take advantage of discounts for using Direct Debit payments.
• Supply is constant, and if you think your bill is wrong, you can supply your own accurate readings.

The new research shows that out of the tariffs currently available there are 283 tariffs available non-prepayment customers but there are just 4 fixed prepayment meter tariffs.

“It is hugely concerning that prepayment meter customers – some of whom are undoubtedly classed as vulnerable – are paying considerably more their energy on average than those on a standard credit meter. According to the latest government fuel, poverty statistics over two million households are living in fuel poverty. British Gas’ swift reversal of its decision to only allow top-up of its prepayment meters by a minimum of £5 earlier in the year underlines how far consumers struggling to make ends meet must make each pound go.”

How Dyball’s Customer Relationship Management (CRM) and Energy Billing system can help you

Supporting both electricity and gas supplies through the same interface, our energy supplier CRM and billing software links via API’s to our market messaging products, REGMAN and GASMAN, to provide UK energy suppliers with data views and functionality, traditionally driven by market messaging systems.

Cross market functionality means domestic customers of gas and electric energy providers and SME energy supply customers are both managed through the same system and interfaces. This software delivers a bespoke energy bill design using Ofgem compliant templates,

Our CRM system, therefore, enables energy suppliers to obtain gas billing software and electricity billing software from one system, which provides greater efficiency for their billing processes.

Further Reading

Energy Sector entering a new phase of COVID-19 crisis



Prepayment Meter vs Direct Debit: Which is Better?



Ofgem announces £350 million support scheme to help struggling energy suppliers



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