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21 October 2020

Is a prepayment energy meter right for you?

Do you have a prepaid electricity or gas meter? Here we answer your top pay-as-you-go meter problems and explain how to switch supplier.
Prepay meter 462671
Sarah Ingrams

Prepaid or prepayment energy meters, also called pay-as-you-go meters or keypad meters in Northern Ireland, mean you pay for the gas and electricity you use, in advance, by topping up your meter with credit.

If you have a prepaid meter, you’ll usually have a card, key or token that you can top-up with credit, usually at a shop or post office, or sometimes online or via your mobile phone.

In Northern Ireland, prepaid meters are one of the most common ways of paying for your electricity and gas (65% of gas customers and 43% of electricity customers pay this way). 

Do you live in Northern Ireland? See our reviews of Northern Ireland energy companies – Northern Ireland electricity and gas.

Help with winter energy bills 

From 15 December 2020, energy suppliers must offer emergency credit to customers who are struggling to top-up their prepayment meter.

This might be because you can’t get to your local shop (for example, if you’re self-isolating) or you can’t afford to do so.

Companies will also have to offer extra prepayment credit for households in vulnerable circumstances while they work out alternative payment arrangements with you.

Energy regulator Ofgem is introducing these new rules to try to reduce the number of customers with prepayment meters who go without energy after running out of credit on their meter.

If you are in debt to your energy company it will also have to work out a ‘realistic and sustainable’ repayment plan. This could include setting payment rates based on how much you can afford to pay and getting in contact with you proactively. Many suppliers do this already.

Prepayment meter cap in Britain

In England, Scotland and Wales, the proportion of customers with prepayment meters has increased from 7% to 16% over the past 10 years. 

If this includes you, you’ll often have paid more for your energy  than those who have a standard meter. This was because the cheapest tariffs were available to homes with standard meters only and who paid by direct debit. 

The government capped prepayment tariffs from 1 April 2017. This limited the amount of money energy firms could charge their customers with prepayment meters. At the time, the government said it expected this to save homes £80 a year on average. 

Historically, the price cap for prepayment customers was set separately to the price cap for standard energy tariffs, but from December 2020 the prepayment meter price cap will set as part of the cap for customers who have standard meters and pay by direct debit. 

The prepayment meter cap has been raised and lowered several times since it was introduced, as you can see below. 

Even with the price cap in place, you could still save more by switching supplier or by changing your prepayment meter. Read on to find out how.

Why do I have a prepaid energy meter?

While some customers have always had a top-up prepayment meter, other households, after going into debt on their energy bills, have had one installed by their energy supplier.

Prepayment can be a useful way of keeping on top of your energy usage and managing your household budget. But it can also stop you accessing the cheapest deals for your gas and electricity. The cheapest dual-fuel deal costs £834 for a year on average if you have a standard meter and pay monthly by direct debit. With a prepaid meter, the cheapest equivalent deal is £986.

If you’re considering a prepaid meter, it’s worth bearing in mind that:

  • If you run out of credit on your meter, you could be left without gas or electricity until you top up.
  • You’ll need to remember to top up. Not all energy firms offer online top-up, so you may need to go to your local shop.
  • You pay a daily fee even if you use no gas or electricity at all. This is called a standing charge and applies to most tariffs on a standard credit meter, too. But if you have no credit, you’ll have to pay back all the standing charges you owe when you next top up.

How to get rid of your prepaid meter

The cheapest energy deals are usually fixed-term tariffs, where you pay by direct debit each month and see your bills online. Find out more about different types of energy tariffs

To access these cheapest tariffs, you need a standard credit (bill-paying) meter.

None of the Big Six energy suppliers charge to swap a prepayment meter to a standard credit meter anymore. If you’re with a smaller supplier, check with the company as to whether there’s a fee to change your meter.

Most of the big companies, except EDF Energy, will run a credit check. This can show up on your credit file, meaning potential lenders can see it. Check the table below for other criteria you’ll need to meet to get your prepayment meter changed.

Company Criteria for installing standard credit meter
Big Six energy suppliers’ criteria for switching meter
British Gas Hard credit check, taking into account your credit history for the past six years. You must also be debt-free when you ask to change the meter.
EDF Energy No credit check. Customers must be in credit, and not have been in debt in the past three months. You must have had a prepayment meter at least 12 months and not had another prepayment meter for the same fuel within three years.
Eon Hard credit check and you must pay off any outstanding debt on your meter.
Npower Existing customers must be debt-free and have good payment history for the past six-to-nine months. New customers may be credit-checked. If your credit is poor, you can pay a £250 security deposit per fuel instead, refundable after 12 months.
Scottish Power Credit check and you must either debt-free or set up a repayment plan. If your credit rating is poor, you may also need to pay a security deposit of £150 per fuel, refundable after a year. 
SSE Hard credit check and your must pay off any outstanding debt on your meter.

Table notes

1 Information correct at 20 March 2017

Read our guide to improving your credit score if your energy supplier won’t let you switch following a credit check.

If you’re with a smaller supplier that says it’ll charge a fee to change your meter, you could switch to another supplier that doesn’t and then get it to change your meter instead.

Use our independent switching site, Which? Switch, to find another supplier and a cheaper energy deal.

You can switch supplier as long as you have less than £500 of debt for gas and electricity, energy regulator Ofgem says. Its Debt Assignment Protocol lets you switch to another supplier and repay the debt to it instead, based on your agreement with the new supplier.

Save money on energy

If you can’t get rid of your prepayment meter, check that you’re on the cheapest deal for the amount of gas and electricity you use. Ask your energy supplier to put you on its cheapest deal for your usage, or use a price comparison website, such as Which? Switch, to make sure you find a good deal and save money.

Check our guide to switching energy supplier for step-by-step advice and to make sure you get an accurate quote.

Top five prepayment energy problems solved

We've outlined some of the most common problems that prepayment meter customers experience, and how to deal with them. 

  1. Inaccurate bill: contact your energy supplier and ask it to explain or correct your bill. Have up-to-date meter readings to hand.
  2. Price increase amount: if your energy firm announces an increase in the price of its standard tariff and you’re on it, you can switch energy supplier to avoid it. Follow our step-by-step guide to switching energy supplier. There are no exit fees if you are on a standard (or out of contract) tariff.
  3. Lack of meter reading: make sure you’ve submitted your latest meter readings to your energy supplier. This means your bill is based on your actual usage, not estimates. If it’s estimated, check against your own readings to see how close it is. If you need your energy supplier to send someone to read your meter, get in touch with it and ask.
  4. Inaccurate meter reading - if you believe your meter is faulty, take regular readings to help prove your case. If you think it's running fast, try turning off all of your appliances and watching the meter; it shouldn't still be recording significant amounts of energy. You can also ask your energy firm to test your meter; find out more in our guide to dealing with a faulty energy meter.
  5. Problems with customer service: try online FAQ sections or online chat if you can, as this can be quicker than phoning (as our energy firms call waiting investigation revealed). If you have a complaint, check our tips for complaining to your energy supplier.
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