Gas and Electricity Meters Guide - Part 3 of 4

Paying for your gas and electricity by using standard meters can lead to a nasty shock - when the estimated bill arrives you may find that you’ve used much more energy than you expected and could therefore be paying out more than you can afford. However, this issue need never arise if you take advantage of prepayment meters.

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What are prepayment meters and can they help you save?

The concept behind prepayment meters is simple - instead of paying after you have used your gas and electricity, you pay before you use it. According to research conducted in 2007, there are 5.8 million prepayment meters in Great Britain with 14% of electricity customers using prepayment meters and 10.4% of gas customers also using the prepayment system.

Prepayment meters are usually installed by the gas and electricity supplier, if it feels that the customer can not keep up payments on their energy bill. However, they can also be requested by the customer themselves - and are often seen as a good method of budgeting. Generally speaking they are used by lower income households, such as people on welfare benefits, lone parents or those with no bank account.

There are several different types of both gas prepayment meters and electricity prepayment meters available.

Standard prepayment meters can come with a single or two-rate reading, similar to that of Economy 7. You can top it up based on how much you wish to use.

Also available is the PayPoint network. With this system you receive rechargeable tokens that can be loaded with whatever amount of money you choose. These tokens will usually take the form of Quantum cards for gas meters and plastic keys for electricity meters.

There are disadvantages with prepayment meters, however, such as access to charging facilities. In addition, many suppliers add on additional charges that they claim are necessary to finance and maintain the meters themselves. According to Consumer Focus estimates, prepayment meters can cost on average an additional £195/year for gas and electricity.

Nevertheless, there are exceptions to the rule and some suppliers will not invoke additional charges for prepayment meters. That is why it is crucial to shop around for the best rates. Such additional charges are known as 'back charges'. These charges are incurred, through no fault of the customer, when a provider changes its unit rates but fails to recalibrate prepayment meters accordingly, As a result, customers may be paying less than is necessary and be oblivious to a build up of energy debt on their account. Once the provider finally gets round to updating the meter, an additional charge will be added to the meter to clear any outstanding debt. This type of practice has been abolished by British Gas, Scottish & Southern and EDF but is still in place for E.ON, Npower and Scottish Power.

Despite this issue, customer satisfaction with prepayment meters is high, although around half of prepayment customers believe they are using the cheapest payment method and this is not necessarily true.

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