Money
Getting the best deal
Pre-payment meters for your bills: what you need to know
Pre-payment meters for gas and electricity are costing homeowners millions of pounds more than those paying by direct debit, according to a new study
The average pre-payment tariff is £150 more expensive for gas and electricity than the best value rate says Moneysupermarket.com.
With around five million customers on pre-payment meters, people are missing out on a collective £770 million a year.
Households on low incomes use pre-payment electricity meters to allow them to budget.
Yet an estimated half a million households have already slipped into fuel poverty in 2008 as a direct result of energy price rises according to Energywatch.
British Gas has this week launched the first online tariff for pre-payment meter customers. It claims moving to an online pay as you go tariff will see an average dual fuel bill fall from £1143 to £1073 a saving of £70. British Gas has 2 million Pay As You Go Energy customers.
The new tariff is only available to customers supplied with both gas and electricity on a prepayment meter by British Gas.
However, it is still more expensive than its cheaper direct debit tariff which costs around £845 a year.
Another criticism of pre-payment meters is when suppliers backdate price increases which leaves hard-up customers struggling to meet bills.
Vulnerable customers who are struggling to pay for their energy bills should speak to their supplier who may be able to offer special social tariffs or give information on swapping to a credit meter, or advice on any other discounts they might offer.
Consumers should also consider going back to a direct debit set up with a fixed tariff to allow people still to budget.
Mark Todd, director at energyhelpline.com said: "It has been confirmed that gas and electricity prices will rise by as much as 40 per cent this year, according to energy bosses.
"We are predicting the first major energy supplier will raise its prices in July by 10-20 per cent. The good news is, even though market conditions are forcing suppliers to hike up the cost of energy and gas, there are some great last minute fixed rate deals out there.
"A price rise in July will signal an end to many capped tariff deals. At present the best deals on the market come from E.ON, British Gas, ScottishPower and npower. We expect taking a capped deal now and staying on this until late 2009 will save a typical home £300-500.
"We urge consumers to act now and switch to a better deal, before it's too late."
* Written by Holly Thomas. Holly is an award-winning financial journalist and Deputy Personal Finance Editor at the Daily Express and Sunday Express. Her views represent her own opinions and are for general information only. Always seek independent financial advice.
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