Pre-pay energy customers pay £226 more - Gas and electricity - News - Moneyfacts

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Pre-pay energy customers pay £226 more

Pre-pay energy customers pay £226 more

Category: Gas and electricity

Updated: 03/07/2015
First Published: 03/07/2015

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Do you pay for energy by pre-payment meter? If so, you could be paying more than your direct debit-paying counterparts, which could unfortunately make those bills even harder to cover.

Analysis from Citizens Advice has revealed that pre-pay energy customers pay an average of £226 more per year than they would on the cheapest online direct debit deals – equating to an increase of 22%. Given that those on pre-payment meters (PPMs) are typically also on the lowest incomes, this kind of difference could dramatically affect a family's standard of living.

This is just the average, too, with some companies charging even more – Co-operative Energy had the biggest variation, with its cheapest pre-payment tariff (£1,356.47) being a whopping £405.25 more than its cheapest direct debit deal (£951.22), meaning pre-payment customers are charged an additional 43%.

Furthermore, the differences in prices are widening across the country, which shows that competition isn't working well for all consumers. This essentially means that those on pre-payment meters will be more likely to face the "heat or eat" scenario, and with an estimated 80% of households with pre-payment meters already being in debt (according to Ofgem figures), the difficulty could be heightened.

"Pre-pay energy consumers get a raw deal," said Gillian Guy, chief executive of Citizens Advice. "Our research shows that many PPM customers have to fork out hundreds of pounds more than those on online direct debit deals. This unfairness leaves some of the poorest people struggling to heat their homes and keep the lights on. Since the launch of our campaign, some suppliers have said they will improve their PPM offer, but there is still a long way to go."

Citizens Advice is therefore calling on the Competition and Markets Authority to address this inherent unfairness of the energy market, and it's hoped that the current investigation will provide "an opportunity to overhaul the energy industry and make it fairer – giving PPM customers a better deal is a crucial part of this", added Gillian.

What next?

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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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