UK energy suppliers tend to see a gas and electricity prepayment meter as a way for a user to manage their budget and for them to avoid energy debt. This is why they are usually the option presented to anyone who has had trouble paying their energy bills. However, according to Citizens Advice, the use of prepay meters could be costing each household around £80 – £90 a year more than a credit arrangement. Other estimates put the typical “penalty” of using a prepay meter at over £200 p.a.
Ofgem, the government’s energy regulator, found recently that around half a million homes in the UK had been forced to install an energy meter over the past six years, and there are now around 6 million homes (20% of the UK total) using prepayment meters. But if you’re stuck with a prepayment energy meter and so are being charged more for your energy is there a way out?
What is a prepayment meter?
It’s a meter installed in a domestic home that requires you to pay in advance for gas or electricity. The payment is usually made by adding money to a key fob or smart card that is then inserted into the meter.
Why switch from a prepayment meter to a credit meter?
If you have a credit meter then these days you tend to pay by direct debit at a fixed monthly amount designed to cover total energy consumption over the annual cycle. Some accounts will still work by billing quarterly in arrears based on actual consumption. The best energy deals tend only to be available to those with a credit meter and there tends to be a much wider choice of tariffs. If you have a prepayment meter then your choices are very limited and you inevitably pay more; often much more.
So there is a strong incentive to get away from a prepayment meter if you can. It takes around 17 days to arrange the move from prepayment meters to a credit meter. The transition normally requires the physical installation of a new meter and since the start of 2016, none of the big six UK energy suppliers has charged for this.
What if you have existing debts?
Millions of households are in debt to their energy supplier in the UK so you are not alone. If you want to switch to a credit meter then the easiest way to do this is often to switch energy supplier. As long as the debt you have does not amount to more than £500 then there is nothing to stop you from switching.
How do you switch?
Contact your current energy supplier and find out whether you are eligible for a credit meter. Alternatively, contact the energy supplier you want to switch to.
Pass a credit check. This will be crucial in terms of whether or not you’re viewed as a good option for a credit meter. If you don’t pass a credit check then you will need to find a way to give the supplier peace of mind that their bills will be paid (see below). If you’ve had energy debt it’s a good idea to give yourself three months of positive credit behaviour before applying for a credit meter. This time period is often enough to convince a supplier you’re reliable.
New meter installation. If you pass the credit check then your energy supplier will come and remove the prepayment meter and install a credit meter. This could take days or it may take weeks. Make sure you check whether there is an installation charge.
How do energy suppliers differ?
Most energy suppliers are open to allowing anyone to switch from a prepayment meter. However, each has its own requirements – here are four examples:
EDF is a good option with free installation of the new meter. However, you must have been an EDF customer for at least 28 days before you request a credit meter. If you are an existing customer then they will only refuse the request if the meter was installed because of a debt of more than £500. The same goes for E.on.
British Gas will install for free. As long as you have no existing debts with British Gas and you pass a credit check they are unlikely to refuse a credit meter. This makes them one of the more accommodating options.
N Power has recently changed their policy and doesn’t charge for a change in meter. However, there are a series of conditions you need to satisfy before they will arrange a change.
How can you strengthen your case?
If you have existing debt – or you have had debt recently – then energy companies can be wary of switching your account to credit. However, there are some suggestions you can make to convince them:
Offer to pay a cash deposit that is refunded at the end of the year if you meet all your payments.
Provide a payment plan to show how you can afford the payments with your budget.
Agree to make all your payments by direct debit.
Present them with three months of debt-free energy accounts
Wait until you have reduced any energy debt to under £500
Alex Hartley is a keen advocate of improving personal finance skills. She's worked at Solution Loans since 2014 and written hundreds of articles about how people can manage their money better. Her interest in personal finance goes way back to...Read about Alex Hartley
We use cookies to make your experience on our site even better. They also help us to understand how you use our site. By clicking 'Accept All' you're agreeing to our use of cookies. You can change your cookie preferences by choosing 'Manage Settings' and if you want to know more, you can read our cookie policy.
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
Cookie
Duration
Description
cookielawinfo-checkbox-analytics
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checkbox-functional
11 months
The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checkbox-necessary
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-others
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-performance
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy
11 months
The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.