ENERGY bills have fallen over the summer for millions of households – but what happens if you have a prepayment meter?
The latest energy price cap came in on July 1 lowering a typical households dual-fuel gas and electricity bill to £2,074 a year.
The current £2,074 cap is just what firms can charge customers but your bills could still be higher depending on usage.
And some smaller households might see their energy bills come in lower than that amount.
Around 4million UK energy customers use a prepayment meter, according to Ofgem.
If you have one, you pay for your gas and electricity prior to use, by topping up a meter at a shop or online.
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The meters are often installed in homes that have fallen into debt or by landlords in some rental properties.
But you might also be wondering what having a prepayment meter means for your energy bills.
What will happen to prepayment energy bill prices?
As of July 1, customers on prepayment meters will no longer pay more a year than those paying on direct debit.
Previously the cost had been higher for people with prepayment meters due to the costs of setting up and maintaining meters.
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However, in the Spring Budget, this was squashed and it is now no more expensive to have a prepayment meter.
Altogether, an estimated 300,000 households on prepayment meters face having debts deducted when they top up – instead of the cash going towards vital heating and lighting.
If you're in debt and on a prepayment meter, the amount you owe can be deducted when you next top up.
How much of the top-up goes towards paying off the debt depends on your energy company – but it can be up to 100% in some cases.
That leaves people with less money to spend on their current energy needs including heating and lighting.
All the major energy companies including British Gas, Eon, EDF and Scottish Power can take up to 100% off a top-up to cover electricity debts.
For example, if your agreed weekly debt repayment amount of £10 for electric and you top up £10, the firms will put the full amount towards your debt and leave you nothing for current usage.
The exact proportion of a top-up that goes on paying back debts will depend on how much a customer has agreed to repay and how much they are topping up.
When it comes to gas debts, the maximum deduction is 90% for British Gas prepayment customers.
Eon, EDF, Octopus, Ovo and Scottish Power deduct up to 70%, while the maximum deducted by Bulb is 30%.
It comes after The Sun called for a temporary ban on moving struggling energy customers on to meters last summer.
What should I do if I can't afford my debt repayments?
Ofgem, which regulates the industry, has clear rules energy firms have to follow if they can't afford their debt repayments.
The first step you should take if you're struggling with payments should be to contact your supplier.
They have to work with you to agree on a payment plan that's affordable and within your budget.
If you're already on a debt repayment plan and can't afford that, you are can bring this up with your supplier and review it.
If you don't know who your supplier is, you can find out on Ofgem's website,
You can ask your energy supplier for:
- A review of your payments and debt repayments
- A payment break or temporary reduction
- More time to pay
- Access to hardship funds
You can always ask for a one-off fuel voucher from your energy supplier if you're on a prepayment meter too.
This is a code sent to you via post, email or in a text message which you can use to top up your meter.
What happens if your prepay supplier goes bust?
If your energy supplier goes bust, don't panic as your energy supply won't be cut off.
Nor will you lose any money if you have already recently topped up.
Instead, the energy industry regulator Ofgem will find a replacement supplier for you.
Justina Miltienyte, energy policy expert at Uswitch, previously told The Sun: "If you are on a prepayment meter and your supplier goes bust, don't worry, you will still be able to top up and your credit will be protected.
"The new supplier would get in touch to let you know of any changes in payment arrangements."
Experts like Martin Lewis' MoneySavingExpert have previously advised customers not to rush to switch if their existing supplier goes bust.
Instead, consumers should "simply sit tight and wait to be contacted by a new supplier".
But it is recommended that you take a meter reading ready for when your new supplier contacts you.
Other charities also recommend keeping old energy bills and waiting until your new supplier is appointed before cancelling any direct debits.
What help can you get with your energy bills?
Charities such as StepChange, Citizens Advice and Turn2Us can help people struggling financially.
A number of energy firms offer customers grants if they are struggling with their bills too.
That includes British Gas, Scottish Power, OVO Energy, Shell Energy and Octopus Energy.
You can also get help via the Household Support Fund, which was recently extended by the government.
The fund is a central pot of money which has been shared between councils in England who then decide who to offer help to.
But, in most cases, it's offered out to households on benefits or a low income.
Some councils are handing out free money as bank transfers and others as energy bill vouchers.
You should check with your council if you think you might be in line for help.
You can find out who your local council is by using the council locator tool on the government's website.
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Here's a quick roundup of charities that can help out if you need free and impartial advice.
- StepChange: 0800 138 1111
- Citizens Advice: 0808 223 1133
- National Debtline: 0808 808 4000
Do you have a money problem that needs sorting? Get in touch by emailing [email protected].
You can also join our new Sun Money Facebook group to share stories and tips and engage with the consumer team and other group members.
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