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Half a million people could be switched to expensive energy meters

Rebecca Goodman
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Rebecca Goodman

Around 450,000 people could be switched onto expensive prepayment meters by the end of the year, data suggests.

Billpayers are often moved onto these meters because they’ve fallen into debt but they are typically the most expensive way to pay for gas and electricity.

Those on prepayment meters are predicted to spend £258 more on their energy bills this winter, compared to someone with a standard meter paying via direct debit, according to data from Citizens Advice.

The charity warned around four million households are expected to be on prepayment meters this winter, and collectively they will spend more than £1bn on energy when compared to direct debit customers.

The predictions have been made by analysing Ofgem data on the number of customers previously moved to prepayment meters because of existing energy debt.

It comes a day before the energy price guarantee is introduced. This applies to prepayment meters and standard meters and will cap the price charged for standard energy bills at £2,500 for the next two years.

However, this figure is just an average and many will pay higher bills. The figure is still significantly higher than energy bills have been previously and many people are expected to struggle to meet the higher costs.

Experts have also warned households to take a meter reading ahead of the guarantee being introduced.

Skipping meals and washing by hand

The charity warned that people who pay-as-they-go for energy are at particular risk over the winter. This is because they don’t have the option of spreading the cost of bills over a year.

It said some people are now unplugging their fridges and freezers, washing clothes by hand, and skipping meals to cut back on their energy bills.

There has also been a rise of 138% in the number of people coming to the charity for help who have been moved onto a prepayment meter.

Customers can be moved to prepayment meters if they’re in debt

Energy providers are allowed to move customers onto prepayment meters if they are in debt and are unable to pay their bills.

It will not be the first action taken, with other options including a payment plan and ways to save energy needing to be discussed first, according to the Ofgem regulations.

Energy is paid for in advance with a prepayment meter, either online or at a local shop. This works differently to standard meters where a customer pays after using the energy, usually via direct debit.

While energy suppliers won’t cut off the gas and electricity to a household struggling to pay, by moving them to a prepayment meter instead the charity said they are effectively still cutting them off.

It is calling on the government to offer more support to these customers over the winter and specifically asking for a winter moratorium on forcibly moving people onto prepayment meters and switching smart meters to prepay until April 2023.

Clare Moriarty, chief executive of Citizens Advice, said: “Energy companies have a duty to protect customers, but forcibly moving people in debt onto prepayment meters is disconnection by the backdoor.

“Even with the bill freeze in place, the cost of energy will still be at a record high. If people can’t afford to top up, they’re at real risk of the heating going off and the lights going out.

“The government must bring in a winter ban to stop energy companies forcing people already struggling onto prepayment meters. It should also bring in targeted support to help people on the lowest incomes pay their bills.”