More than one million British Gas customers will see a reduction in their bills within days as the company rolls out a new government policy.
The company is implementing a plan to reduce prepayment meter charges ahead of time. British Gas said that from Saturday (April 1) its prepayment meter customers would pay the same as its direct debit customers for their gas.
They would keep the same current discount for electricity prepayment meters.
It means the average customer getting both gas and electricity from one of the supplier’s prepayment meters will be £59 better off per year.
Chris O’Shea, the boss of British Gas owner Centrica, said: “We know that more help is needed for prepayment customers and we support the Government’s decision to lower prepayment prices to the same level as direct debit customers.
“We wanted to do more to support this group of customers by introducing this change as soon as we could so British Gas prepayment customers will benefit immediately.”
British Gas has around 1.24 million customers with prepayment meters. Around 158,000 only have electricity prepayment meters and will not benefit from the change.
British Gas is the first energy provider to make the move following an announcement made during Jeremy Hunt's spring budget earlier this month. The Chancellor said prepayment meters currently pay more than comparable customers on direct debit.
He said on March 15: “Ofgem has already agreed with suppliers a temporary suspension to forced installations of prepayment meters. But today I go further, and confirm we will bring their charges in line with comparable direct debit charges. Under a Conservative government, the energy premium paid by our poorest households is coming to an end.”
The move will save more than four million households £45 a year on their energy bills, according to the Treasury. Households on the pay-as-you-go meters, who are typically low income, currently pay more on average than direct debit customers because of firms managing the meters passing on costs to users.
Ofgem is reviewing the use of prepayment meters and companies have been instructed to investigate and offer redress such as compensation to customers where the meters were wrongly installed and regulations not followed.
Last week, the regulator extended the ban on forced installations of prepayment meters until a new code of practice is agreed by energy companies.
Data shows that more than 94,000 prepayment meters were forcibly installed last year without consent when a customer had not paid their bill.
Around seven in 10 of those installations were carried out on behalf of British Gas, Scottish Power or Ovo Energy.
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