Experts at price comparison website Uswitch have raised fears of a "worrying" trend after the use of pay-as-you-go energy meters increased amid the worsening cost-of-living crisis.
Families using prepayment meters who cannot afford to top them up risk being cut off from their energy supply as the UK goes into winter, and advocacy groups are urging the government to prioritise prepayment customers for support when energy bills increase again in April.
Yahoo News UK examines the 'worrying' increase in prepayment metres
The number of households on prepayment meters is rising. After falling for two years, in the six months to March 2022 60,000 new meters were installed. Uswitch warns on the current trajectory, there will be 100,000 more pay-as-you-go meters in the next 12 months.
How do they work? Households pay energy on a pay-as-you-go basis, usually buying credit with a key or a smart card. Once the credit is used, a household will be disconnected and left without electricity or heating. The only way to turn the energy back on is to buy more credit.
Why are more people using them? Energy providers can force households on to prepayment metres for failing to keep up with payments. This is likely to become more common amid rising energy costs. Households can also choose to switch in order to keep control over their payments.
Experts warn the system is risky and unfair. Prepayment customers run the risk of being cut off if they can't afford to top up. There are also fewer deals for customers who rely on them, and prices are higher as they cost companies more money to run.
Prepayment meter users are more likely to be struggling with bills ONS data shows that more than seven in 10 prepayment meter customers are finding it difficult to afford their bills. In contrast, about 40% of standard meter customers are struggling.
Uswitch has called on the government to prioritise prepayment customers when the government's Energy Price Guarantee ends in April, warning that "families and individuals on prepayment meters will be plunged into darkness as they self-disconnect when they can't afford to top up".
Do prepayment meter users get energy bill support? Yes. Suppliers should have contacted prepayment customers before 1 October about the £400 energy rebate. Vouchers should be issued by their energy supplier or automatically credited to a customer's account.
Disabled people and ethnic minorities are more at risk of moving to a prepayment meter. ONS data shows 55% of disabled people report struggling with energy bills versus 40% of non-disabled people. And 60% of ethnic minorities report struggling with them versus 44% of white people. Falling behind with payments poses the risk of being put on a prepayment meter.
The issue is likely to get worse amid the spiralling cost of living crisis. With energy bills almost doubling in a year, inflation at 10.1% and interest rates rising, more households may be forced onto prepayment meters after falling behind with bills.
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