Prepayment meter bills to fall by £450 a year

Britons on prepayment meters (PPM) will see their bills drop by on average £445 a year from July, a group has calculated.

Ofgem has announced its price cap will fall from July, when bills for a typical household paying by direct debit will see their bills drop to £2,074 a year.

Consumers currently pay on average £2,500 a year per household, under the Government’s energy price guarantee, which protects Britons from the Ofgem price cap, which is £3,280 a year.

However, PPM customers will see a more significant drop in their energy bills from the start of July than direct debit consumers, as they previously paid more for their energy.

The Government will ensure this by providing a discount for PPM customers through the energy price guarantee, which will apply to both the unit rate and standing charge, to ensure they do not pay more than direct debit customers.

‌Researchers at NimbleFins have calculated how much PPM bills could come down on average.

The analysts found total electricity and gas costs for a typical household on a prepayment meter will drop from £2,423 a year, from April to June 2023, to £1,978 a year, from July to September 2023, falling by £445.

This compares with total electricity and gas costs for direct debit falling from £2,381 a year to £1,975 a year, for the same periods.

The group based its figures on a typical electricity consumption of 2,900kWh a year and a gas consumption of 12,000kWh.

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Erin Yurday, co-founder and CEO of NimbleFins, told “Our analysis found prepayment meter customers will be making the most savings between July and the end of September this year.

“Although their electricity costs will drop a bit, it’s gas that will be considerably cheaper for prepayment customers.

“And prepayment meter customers will see more savings than direct debit customers – we estimate a decrease in gas per kWh costs of 30 percent for prepayment customers versus 27 percent for direct debit customers.

“From July energy companies must bring prepayment charges in line with direct debits and our analysis shows gas and electricity will both be slightly cheaper per unit for prepayment customers.”

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The group calculated a typical PPM customer will pay £8.55 a week less from the start of July.

Ms Yurday said: “This is welcome news for prepayment customers who have been penalised for years, despite being the most vulnerable members of our society.”

She spoke about how people can best use the savings to help towards their other basic costs.

The expert said: “I would think about using this to pay any outstanding debt that is incurring interest, especially if it’s at a higher rate.

“Otherwise the money could be used to ease the burden of higher food bills, or put towards energy saving measures ready for winter.

“LED lightbulbs, a radiator fan to spread heat around the home, draft excluders or even a hot water bottle can all help – mine was a lifesaver this winter.

“For those with a bit more to spend, we know air fryers are more energy efficient than ovens, and our researchers also found using a heated airer was cheaper than a tumble dryer.”

Many household bills increased from April, including energy bills, as the instalments from the £400 energy bills discount came to an end.

Water bills, council tax and broadband and mobile tariffs also went up, and prices continue to rise for other basics such as groceries.

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