If you are reading this, the chances are that you are finding how expensive prepayment tariffs are from virtually all of the utility companies, and that finding the Cheapest Prepayment Tariff is extremely difficult.
Several years ago, a law was passed for the utility companies, which dictated that prepayment customers should not pay any more for their energy than customers with standard credit meters. This was a step in the right direction for prepayment meter customers, however it did not mean that those on prepayment meter tariffs would be automatically offered exactly the same tariff structures and the lowest possible prices as those with conventional credit meters.
All that the new law did achieve was to ensure that those on prepayment tariffs, paid the same as credit customers who are on a standard (no discount tariff), and since this standard tariff is always, inevitably the most expensive tariff which any particular supplier offers to all of its customers.
What this means is that virtually ALL of the UK Energy Companies automatically place their prepayment customers on a tariff which mirrors the rates of their standard credit tariffs, the one tariff which is always the most expensive, and there is also no opportunity for prepayment customer to move to a better tariff, as these are generally all reserved for those customers who pay by monthly direct debit, something which is not possible to do with a prepayment meter.
Effectively, in real terms this means that the majority of the estimated three to five million households with prepayment meters pay anything between £150 and £250 more, per year, per energy for their Electricity and Gas, across all of the energy suppliers when compared to the best tariffs which are only made available to credit customers.
Even more unfairly, prepayment customers are rarely, if ever, given the opportunity to fix their energy prices by any of the energy companies, so whilst all credit meter customers are encouraged by the Government to fix their energy prices for between one and five years, in order to mitigate future price rises, the courtesy is simply not extended to those with prepayment meters, which means they are stuck on a variable tariff, whose prices can be increased one or two times every year, with as little as a month notice, where the price increases take effect almost immediately.
Care should be taken even with the ‘ethical’ type energy suppliers who advertise their services as being ideal for prepayment customers as they do not pass on a standing charge. I personally have found that these companies are generally the most expensive as the normal standing charge is passed on in the form of a slightly higher energy price, and so whilst being suitable for low energy users, those who use average to higher than average amounts of Electricity and Gas may actually find themselves paying more than a more conventional tariff with a standing charge offered from another energy company!. So don’t be taken in with slick marketing, and make sure that you compare all of the tariffs available.
If you use a prepayment meter which uses an ‘Electronic Key’ to transfer payment top-up’s then there is a well known method which you can use in order to fix your prices for a short period of time AFTER the energy company has announced forthcoming price rises. Generally, an energy company will give a months notice to its customers of an increase, and announce a date where it will become effective. In this example, lets give December 1st as being the date where their prices are increased.
Non Smart Meters which use a key for top up’s generally also use the same key for software and price updates for the meter itself, this means that on and after 1st December, the key will be re-programmed with the new price tariff during a routine top up and when inserted, the meter will update accordingly and begin to charge the new rates. However top ups made before 1st December price increase will still top up at the original rate.
Since most Meters will hold around £200 – £250 worth of credit, and the keys will hold a similar amount, it may be possible to first top up the meter by the full £250 amount, and then make another top up to the key by a similar amount for later use, with both top ups carried out before the date of the tariff price increase, this would mean upto £500 credit at the old pre-increase price, effectively ‘fixing’ the price for a period which should hopefully last most consumers at least several months. Of course it would mean advance financial outlay, but it should save at least £100 – £150 based on an average price increase.
It is also essential that prepayment customers constantly monitor their energy prices and seek comparisons for better tariffs at least two or three times every year, this is because of the variable nature of the standard tariffs which prepayment tariffs are based on, and the fact that they change with every price rise announced by the energy companies. The most effective and easiest method of ensuring that you are on the Cheapest Prepayment Tariff, is to use a comparison website.