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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?
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.
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.
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.
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.
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:
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
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