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Can Pre-payment Meters help you save on Energy Costs?

Why fit a Pre-payment Meter?

For many people on a tight budget, a pre-payment meter seems like a good idea.  Instead of waiting for the hefty bill to drop through the letterbox you can pay as you use. You can even top up extra in anticipation of a time of heavy use like at Christmas, using the meter key or smart card at one of the many top-up points, such as PayZone, many of which conveniently operate out of corner shops and Post Offices.

The credit button on the meter means that if you were to run out at an inopportune time, say whilst the bird is in the oven, you can obtain a temporary overdraft on your energy supply to get you through till the shops open again!

What are the costs of a Pre-payment Meter?

However, Pre-Payment is often the more expensive option. Just as a Pay-as-You-Go mobile phone tariff charges you per call and text rather than offering you a deal for being in a contract, so energy giants are ripping off millions of households by charging weighted tariffs for their pre-payment customers.

What’s in it for me?

From the energy company’s perspective, pre-payment meters do make sense initially. If someone on benefits or on a minimum wage cannot cope with a large quarterly bill, a cash payment option seems like the ideal solution; especially as currently over 5 million people in the UK are in energy debt.

For those who are struggling to pay, Pre-Payment seems to provide a fair way of them repaying their debt at a manageable rate, without cutting them off entirely, something which energy companies are no longer allowed to do.

What’s in it for the company?

But this has now shifted to energy companies taking advantage in a most unfair way by charging over the odds for energy, preying on the most vulnerable who are left with no other option obtain energy. 

Tenanted Properties

As a Landlord, fitting a pre-payment meter is a logical thing to do because it places responsibility for payment of the energy bill firmly in the hands of the tenant. However, on the flip-side, if you buy a house which has previously been rented you need to advise the energy company straight away so that the debt is not transferred to you, and if at all possible switch out the meter to a standard meter.

Not doing so, while pre-payment meters are convenient, will mean that you are tied to a much higher, weighted tariff, and have less options which automatically reduce the bill, such as direct debit or online statements.

Getting a Pre-payment Meter Removed

The other major problem with Pre-Payment is with an energy company’s previous experience. Unfortunately, it can be possible to be “tarred with the same brush” as many other former tenants of a property, and so, whether you have previously had a direct debit or not, an energy company may be incredibly reluctant to remove a pre-payment meter once one is installed, fearing that this will result in non-payment from you the resident.

But, because the benefits far outweigh the hassle, don’t be fooled into thinking pre-payment is a reasonable compromise. If you can present a good track record, a debt-free energy bill, a current account and pass a credit check then it is well worth your while badgering your energy provider until they switch out your meter for one which you can re-pay at a lower negotiable tariff.

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