Millions of households on energy prepayment meters are set to see their bills drop. The controversial extra costs on pay-as-you-go meters are set to be scrapped from July 2023. The move will means that more than four million households across the UK will save around £45 a year on their energy costs.
Chancellor Jeremy Hunt has confirmed that the "pre-payment premium" will be coming to an end. It is news that will be welcomed by those using the meters, typically vulnerable or low income households, who are, on average, currently pay more than direct debit customers due to firms managing the meters passing costs down.
The change is expected to come into effect from July 1, with the Chancellor set to announce the plans in his Spring Budget as part of reforms to the Government's Energy Price Guarantee. The forced installation of prepayment meters is also due to come to an end on Friday, March 31, after Ofgem asked all suppliers to pause installations in a bid to protect vulnerable customers.
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The Government's Energy Price Guarantee. which currently puts the average household energy bill at £2,500 a year amid, was due to increase by £500 next month to £3,000. However, it's thought that the planned price hike could also be scrapped. It comes amid pressure from fuel poverty campaigners.
The Energy Bills Support Scheme (EBSS) is also due to come to an end this month. This has given the majority of UK households £400 off their energy bills, delivered as monthly £66 or £67 bill reductions since October.
Despite no official word from the Treasury, Chronicle Live reported that money expert Martin Lewis had written to Jeremy Hunt with the support of over 110 charities calling on the Government to ditch the £500 increase. He said he is "90% certain" that the price hike will not go ahead. However, he raised concerns that struggling households will still feel the pinch as the EBSS comes to an end.
The consumer champion said: "The real big impact is the end of the £67 a month payments, which of course proportionately helped lower users far more." The MoneySavingExpert website has a useful calculator tool for households to work out how much they are likely to pay from April after the changes.
Making the announcement that the 'pre-payment premium' would be scraped from July, 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."
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