The rules are changing on how and when customers on pre-payment meters can switch their energy suppliers.
From 1st November energy customers who pay their bills by pre-payment will be able to switch to cheaper deals with other suppliers - even if they have debts of up to £500.
This is to help people deal with rising utility bills and also to encourage more people to switch providers.
What’s changed?
At the moment customers with any of the big six energy providers are allowed to switch suppliers only if their existing debts aren’t more than £200.
The six suppliers involved in the Ofgem agreement are: British Gas, EDF, E:On, Scottish Power, SSE and npower.
By increasing the debt threshold it’s hoped thousands more people will now be able to switch their energy suppliers who previously weren’t able to. Providers will also have to actively contact customers and let them know about how to switch and deals available to them.
Energy debt
Energy debt is a massive problem for many people across the UK and for those on these kind of plans, more than 315,000 electricity customers and 320,000 gas owe money to their supplier.
The average amount owed is £357 for electricity, a fall from £360 in 2010, and £371 for gas, an increase from £339.
One of the reasons Ofgem is introducing these new rules is to encourage providers to proactively help customer who are in debt and to only use disconnection as a last resort.
In the past year disconnection figures have fallen with a 54% drop for electricity and 59% for gas in 2011. Customers are also now being given longer to pay off energy debts and the number on repayment plans has also gone down.
Pre-payment plans
If you’re on a pre-payment plan this means you pay for all your energy costs up front. When you pay for the gas and electricity you can either do this via an energy card, a token or a key or even though a local shop.
These pre-payment meters are often installed by suppliers when a customer has fallen into debt, while landlords also use them regularly in rented houses.
However, with one of these, meters customers are generally paying over the odds for the energy they use and also priced out of the best energy deals on the market which aren't available on a pre-paid tariff.
They’re also a lot of hassle as the energy isn’t automatically available.
Switching providers
Switching providers, be it for gas or electricity or both, is something we as a nation are not keen on.
However, there are many ways to save money on your energy bills and switching is one of the most important. It’s a quick and easy process and our step-by-step guide will show you how.
Although pre-payment customers aren’t able to get the best deals on the market, and the savings made from switching won’t be as noticeable as those switching on a standard contract, there are still savings to be made.
However, before you do anything check with your supplier as there may be fees involved for having a meter installed or removed.
You can compare the whole gas and electricity market through our comparison tables. Here I’ve listed the five cheapest pre-payment plans.
The top five pre-payment plans
|
Provider* |
Tariff |
Average yearly price |
Saving compared to the average deal |
|
EDF Energy |
£1,205 |
£81 |
|
|
E:On |
£1,227 |
£59 |
|
|
Scottish Power |
£1,227 |
£58 |
|
|
Utilita |
£1,230 |
£56 |
|
|
Npower |
£1,237 |
£49 |
*source: energyhelpline. Savings are worked out by taking an average household on 16500 kwh gas and 3,300 kwh of electricity switching to one of the included plans.
More on energy:
The best and worst energy bills
How to complain about your energy supplier