How much more does it cost to use a pre-paid meter?

Analysis by Citizens Advice shows that customers using pre-pay meters (PPM) pay on average over 20% more than those on direct debit for their energy costs.

When comparing the cheapest direct debit, with the cheapest PPM tariff, the difference in some instances was between £100 and £400 per year. Over a five year period, using the average costs, those on a PPM will have paid for an additional year of energy compared to direct debit customers.

The table below shows the difference for dual fuel tariffs (gas and electric) from the major providers in the UK.

Supplier Cheapest dual fuel online direct debit tariff Cheapest dual fuel prepay tariff £ difference % difference
British Gas £1,156.11 £1,178.94 £22.82 2%
E.ON £1,101.07 £1,205.18 £104.11 9%
SSE £1,111.03 £1,237.94 £126.91 11%
Spark Energy £1,058.28 £1,240.72 £182.44 17%
npower £1,040.09 £1,263.88 £223.80 22%
OVO Energy £932.53 £1,168.23 £235.70 25%
EDF Energy £965.05 £1,228.33 £263.28 27%
Scottish Power £941.21 £1,205.16 £263.96 28%
First Utility £913.42 £1,232.38 £318.96 35%
Extra Energy £924.85 £1,266.39 £341.54 37%
Co-op Energy £951.22 £1,356.47 £405.25 43%
Average £1,008.62 £1,234.87 £226.25 22%

 

Source: Citizens Advice

“Our research shows many PPM customers have to fork out hundreds of pounds more than those on online direct debit deals. This unfairness leaves some of the poorest people struggling to heat their homes and keep the lights on.”

Gillian Guy, Chief Executive of Citizens Advice

The energy regulator Ofgem released a report in June which also highlighted cheaper tariffs being offered on direct debit vs pre-pay meters:

“There are substantial savings available for prepayment customers who are able to switch. Customers on a standard variable tariff (the most common tariff) can save up to £300 a year if they switch to the cheapest direct debit tariff and up to £66 a year if they switch to the cheapest prepayment tariff in the market – this includes fixed tariffs.”

Ofgem Prepayment review: understanding supplier charging practices and barriers to switching, June 2015

The Competition and Markets Authority released initial findings from their investigation in to the energy market this week. It highlighted that for the poorest 10% of households, energy bills accounted for around 10% of their total expenditure.

“There are millions of customers paying too much for their energy bills – but they don’t have to.”

Roger Witcomb, Chairman of the energy market investigation

If you, or someone you know, think you’re paying too much for your energy bills then why not take advantage of our FREE utility switching service. We’ll compare and recommend tariffs based on your location and usage. Harrington Brooks receives commission from USwitch for providing this service. Further information regarding what we receive can be provided upon request.