Prepayment meter 'premium' to be scrapped

Customers with energy prepayment meters will no longer be charged an extra premium, following an announcement by the Chancellor of the Exchequer Jeremy Hunt in his budget speech.

He is to end the so-called 'prepayment premium', saving four million households around £45 a year on their energy bills. The Treasury estimates the change will cost the taxpayer £200 million.

Households who pay for energy using 'pay-as-you-go' meters are often on low incomes, but they currently pay more than direct debit customers.

The Chancellor said: “It is clearly unfair that those on prepayment meters pay more than others. We are going to put an end to that.”

He added: “From July, four million households won’t pay more than those on direct debits. We’ve already cut energy bills by almost half this winter, and this latest reform is proof again that we’re always on the side of families.”

Forced Installation of Prepayment Meters

As we reported in The Customer Service Blog on 8th February 2023 repayment meters have been in the spotlight after some energy suppliers were found to be breaking into the homes of people in arrears, to forcibly install these meters.

An investigation by The Times revealed how vulnerable customers were being forced by British Gas to have 'pay-as-you-go' meters installed, or have their gas supply switched off altogether.

Energy companies were subsequently banned from installing prepayment energy meters under warrant, as reported in a previous article in this blog.

Grant Shapps, the Energy Secretary, said: “While actions I’ve pushed for have meant forced installations are on pause, warrants aren’t being waved through and Ofgem is toughening up its reviews, our changes will make sure families aren’t penalised simply for how they heat their home.”

Meanwhile, the Chancellor Jeremy Hunt is expected to cancel a planned £500 increase in average energy bills which was due to come into force next month.

For the average household that means bills could stay at about £2,500, instead of going up to £3,000 as previously announced.

Hunt has recently come under growing pressure to cancel the rise, which was set to come into force from 1st April as the country grapples with the cost of living crisis.

Some of the information used in this article is taken from PA Media.

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