ENERGY bills are set to rocket as suppliers hike prices due to the soaring cost of wholesale gas.
Firms are increasing their prices during the UK energy crisis – but what does that mean for Brits using a pre-payment meter?
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Around 4.3million UK consumers use a pre-payment meter for their energy bills, according to Uswitch.
This involves paying for your gas and electricity use before you use it by topping up a meter at a shop or online.
They are often installed in homes that have fallen into debt or by landlords in some rental properties.
A pay as your go meter is not as good value as having a credit meter, but some people find it helps them plan their spending and avoid surprise bills.
Consumers who use a prepayment meter miss out on the best fixed rate tariffs, so it is often more expensive.
However, cheap fixed rate deals have been pulled from the market due to the UK’s energy crisis.
Gas and electricity firms are struggling due to rising wholesale gas prices.
Yesterday, Green and Avro Energy both collapsed, leaving more than 800,000 customers without a supplier.
What will happen to pre-payment energy bill prices?
Customers who use a pre-payment meter will see their bills rise along with consumers who have a credit meter.
The average prepayment energy bill will increase by around 14% to £1,309 per year from October 1, according to Energyhelpline.com.
Experts have warned against rushing to top up your meter ahead of the rise.
There’s no need to stockpile, especially if doing so will stretch your finances too far.
Justina Miltienyte, energy policy expert at Uswitch.com, said: “Prepayment customers are protected by the prepayment price cap.
“This cap will rise to £1,309 on 1 October but it will then stay at the same level until at least 1 April next year.
“There is no need to top up a lot right now, especially if that puts you into financial difficulty.”
Tashema Jackson, consumer champion at energyhelpline.com, added: “The energy market is currently going through an unprecedented period.
“High post-pandemic demand, combined with low renewable power production and a fire affecting the electricity supply from continental Europe, have driven wholesale prices for gas and electricity to record highs.”
Can you switch energy deals?
It is still possible to switch deals, but it can might be hard to find a good value tariff.
There are only variable pre-payment tariffs available – at the time of writing, the cheapest deal was Ebico Living’s plan at an average price of £1,058.
The most expensive was British Gas’ Safeguard PAYG for £1,309 a year.
Tashema said: “This perfect storm has resulted in many energy suppliers withdrawing their fixed rate tariffs over the last week, and this is no different for pre-payment meter tariffs.
“Make sure you keep an eye out should the rates change, which they are liable to do with a variable tariff, and if the price does change, check your options, as one of the benefits of a variable tariff is the ability to walk away penalty free if things change for the worse.”
You’re still able to switch to a credit meter, rather than a pay-as-you-go deal.
This is usually a cheaper option because credit customers have access to fixed rate tariffs.
However, firms have also pulled these cheap deals from the market amid a mounting energy crisis, so now might not be the best time to switch.
According to EnergyHelpline, the most expensive fixed deal on the market currently is a hefty £2,125 a year.
If you do decide to swap in favour of a credit meter, your account will have to be debt-free and you may also be required to pass a credit check.
The switch often comes with a cost and if you’re renting you will have to get your landlord’s permission to change the meter.
What happens if your pre-pay supplier goes bust?
If your energy supplier goes bust, you shouldn’t panic as your electricity and gas will not be switched off.
You will not lose any money you have already topped up with.
Instead, the energy industry regulator Ofgem will find a replacement supplier for you.
Justina Miltienyte, energy policy expert at Uswitch, said: “If you are on a prepayment meter and your supplier goes bust, don’t worry, you will still be able to top up and your credit will be protected.
“The new supplier would get in touch to let you know of any changes in payment arrangements.”
With the recent fall of People’s Energy, for example, Ofgem has appointed British Gas to take on supplying the provider’s over 350,000 customers.
Experts like Martin Lewis’ MoneySavingExpert are advising customers not to rush to switch.
Instead consumers are advised to “simply sit tight and wait to be contacted by a new supplier”.
But it is recommended that you take a meter reading ready for when your new supplier contacts you.
Other charities also recommend keeping old energy bills and waiting until your new supplier is appointed before cancelling any direct debits.
Citizens Advice has called for the government to guarantee that no one will lose access to the Warm Home Discount when they move supplier.
The charity also said customers in debt to failed suppliers should continue to have access to affordable repayment plans.
What help can you get with your energy bills?
Charities such as StepChange, Citizens Advice and Turn2Us can help people struggling financially.
National Energy Action is able to offer advice on energy bills and keeping warm at home.
There is also extra help available for vulnerable customers to help them cover gas and electricity costs.
That includes the Winter Fuel Payment, which gives people over 65 between £100 and £300 towards the cost of keeping their homes warm.
Low income households can get £25 a week to help with energy bills in the winter through the cold weather payment scheme.
The warm home discount scheme means you can a £140 payment that goes toward your heating costs.
Business Minister Paul Scully struggles to put a figure to rising energy cap prices in the coming months
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