Prepayment meter customers will no longer be charged more for their energy under reforms to be announced in the Chancellor’s Budget, it has been disclosed. Jeremy Hunt will end the “prepayment premium” from July, saving around four million households £45 a year on their energy bills, according to the Treasury.
Households on pay-as-you-go meters are typically those on low incomes, yet they currently have to fork out more on average than direct debit customers because firms managing the meters pass on the costs to those who use them.
Mr 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.”
The Treasury estimates that the change will cost the taxpayer £200million. Prepayment meters have been in the spotlight after some energy suppliers were caught breaking into homes of people struggling to pay their bills to forcibly install them. An investigation by The Times revealed how vulnerable customers – including disabled and mentally ill people – were being forced by British Gas on to the pay-as-you-go meters, or have their gas supplies switched off.
Firms were subsequently banned from installing prepayment energy meters under warrant, but that is due to expire at the end of March. Energy Secretary Grant Shapps said: “While actions I’ve pushed for have meant forced installations are on pause, warrants aren’t being waved through and Ofgem is toughening up its reviews. Our changes will make sure families aren’t penalised simply for how they heat their home.”
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Meanwhile, the Chancellor is expected to cancel a planned £500 hike in average energy bills due to come into force next month. For the average household that means annual bills could stay at around £2,500 instead of going up to £3,000 as was previously announced.
Mr Hunt has come under increasing pressure in recent weeks to cancel the rise, which was set to come into force from April 1 as the country grappled with the cost-of-living crisis.
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