Prepayment meter ‘penalty’ to be scrapped from July - will you be £45 a year better off?
Prepayment meter customers will no longer pay more direct debit customers from July. We explain what it means for the energy bills of the 4m households affected


Get the best money-saving tips, tricks and deals sent straight to your inbox every week. Make sense of your money in partnership with The Money Edit.
Thank you for signing up to The Money Edit. You will receive a verification email shortly.
There was a problem. Please refresh the page and try again.
Four million households with prepayment meters will pay less on their energy bills from July under reforms to be announced in the Spring Budget on Wednesday.
It comes after the wrongful installation of pay-as-you-go meters scandal that saw British Gas send debt collectors to break into vulnerable customers’ homes to force-fit pre-payment meters.
Energy customers on a prepayment meter, who tend to be on a low income, currently pay more on their energy bill than direct debit customers.
This is sometimes referred to as a ‘prepayment premium’ and usually increases energy bills for these households as the cost of managing the meters (such as collecting payments or giving out vouchers) is passed down to customers.
The reform means prepayment customers will not be paying more than those on direct debit.
And it means around four million households will save £45 a year on their energy bills.
It will benefit the 600,000 homes that were forced on a prepayment meter in 2022 because they couldn’t afford to pay energy bills.
Chancellor of the Exchequer, Jeremy Hunt said: “It is clearly unfair that those on prepayment meters pay more than others. We are going to put an end to that.
“From July four million households won’t pay more than those on direct debits. We’ve already cut energy bills by almost half this winter, and this latest reform is proof again that we’re always on the side of families.”
This change will come into effect from 1 July 2023 - the same day that any new changes to the Energy Price Guarantee will be applied.
What other energy help is there for prepayment customers?
There is more help available for those on a prepayment meter who are struggling to pay their energy bills.
- The £400 energy grant is now available for prepayment meters to claim as a one-off payment. If you haven’t received your voucher through the post or via email yet, you should call up your energy supplier and ask them to issue your voucher. All vouchers must be used by 30 June 2023 and you are not required to pay the £400 back.
- Energy suppliers’ hardship funds help those in need. Note, if your energy supplier has stopped taking applications for hardship funds (as they are extremely popular), check what British Gas Energy Trust offers help to non-customers too.
- Friendly Credit guarantees you won;t be cut off and is available during certain time periods - mainly overnight, weekends and public holidays.
- Contact your energy supplier. If you can’t pay your energy bill, contact your energy provider and be honest. Tell them you can’t afford to pay and you can ask for one of the following as help: If they will give you more time to pay your bill, payment break or reductions, a review of your debt repayments and normal payments, and advice on how to use less energy.
Find out what other help is available if you can’t pay your energy bills.
Related articles
Look After My Bills Newsletter
Get the best money-saving tips, tricks and deals sent straight to your inbox every week. Make sense of your money in partnership with The Money Edit.

Vaishali graduated in journalism from Leeds University. She has gained experience writing local stories around Leeds and Leicester, which includes writing for a university publication and Leicester Mercury.
She has also done some marketing and copywriting for businesses.
When she is not writing about personal finance, Vaishali likes to travel and she's a foodie.
-
-
Octopus Energy relaunches energy tracker deal – we explain what you need to know and if it could save you money
If you’re an Octopus Energy customer, you may be able to save on your energy bills with the relaunch of its tracker deal. We look at how it works
By Sue Hayward Published
-
Three energy firms pay £8m in switching compensation - has your provider paid out?
More than 100,000 customers have received compensation after changing providers, but is now a good time to switch energy suppliers?
By Tom Higgins Published
-
Octopus Energy relaunches energy tracker deal – we explain what you need to know and if it could save you money
If you’re an Octopus Energy customer, you may be able to save on your energy bills with the relaunch of its tracker deal. We look at how it works
By Sue Hayward Published
-
Three energy firms pay £8m in switching compensation - has your provider paid out?
More than 100,000 customers have received compensation after changing providers, but is now a good time to switch energy suppliers?
By Tom Higgins Published
-
HMRC tax credit renewal packs: act quickly to avoid losing benefit payments
Households receiving tax credits will be asked to confirm their details to ensure they continue to receive their entitlement. Here’s everything you need to know to make sure you don’t miss out on up to £3,480 a year
By Tom Higgins Published
-
Mobile provider rewards: how to earn up to £700
Your phone could be the key to unlocking hundreds of pounds worth of discounts and freebies that you don’t even know about. We reveal which mobile providers offer the best rewards
By Vaishali Varu Published
-
How much do cooking appliances cost to run?
Energy-saving cooking tips from the Energy Saving Trust
By Katie Binns Published
-
Virgin Media leaves thousands without broadband: are customers entitled to compensation?
Tens of thousands of Virgin Media customers were hit by broadband outages yesterday. We explain your rights if your broadband goes down
By Katie Binns Published
-
Broadband switching service delayed - how it will eventually work and why it’s crucial to switch
A broadband switching service designed to make it easier to change to a cheaper or faster deal has been delayed. We explain how you can still avoid huge increases to your monthly internet bill
By Katie Binns Published
-
Heat pumps: why you can claim a £5,000 government grant for longer
Why you now have more time to apply for a government grant towards getting a heat pump in your home
By Sue Hayward Published