Some 5.5 million households who will miss out on Government assistance on energy bills are reportedly set to pay more for their power within weeks. On average, these customers, who pay by standing order, credit, debit card or cheque, will end up paying £160 more than those who pay by direct debit or through a prepayment meter.
Under Ofgem’s Energy Price Cap and the Government’s Energy Price Guarantee, unit rates and standing charges are affected by factors such as how households pay their bills and where they’re located.
But this will no longer be the case in July after the Treasury confirmed the end of the “prepayment meter penalty”.
At the moment, the cheapest way to pay your energy bills is via direct debit.
Households that pay through a prepayment meter currently pay approximately £45 a year extra.
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Under the energy price guarantee, typical household pays no more than £2,500 a year, a figure based on the average home going through 2,900kWh of electricity and 12,000kWh of gas a year.
From July this ‘prepayment meter penalty’, will end with customers using prepayment meters paying the same rates as those who pay by direct debit.
The removal of the £45 prepayment meter premium will help roughly four million households.
But those who pay on receipt of their bill still face paying more.
Ofgem figures obtained by The Sun showed that 5.5 million households who pay for their energy bills by standing order will miss out on new government help and face paying more.
Latest Ofgem figures showed that around two million households paid their energy bills quarterly either by cheque or cash, while up to three million more were thought to pay their bill with a standing order.
These households faced higher standing charges and unit rates, which worked out to see a typical household in these groups paying £160 more a year for their energy bills than necessary.
Matt Copeland, head of policy and public affairs at National Energy Action, said reports that the Government would scrap the prepayment meter premium were welcome but added that those on standard credit should not be left out in the cold.
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He said: “You should not have to pay more for your energy because you pay by cheque or in cash, on receipt of the bill.
“These are predominantly older, more digitally excluded households and should not face more than a hundred pounds of extra costs, simply because of how they pay.
“We urge the Government to rectify this disparity at the same time as doing so for prepayment meter customers.”
Millions of households are set to benefit from further energy bill savings as the Energy Price Guarantee (EPG) remains at £2,500 a year until June.
Ahead of the Chancellor’s Spring Budget later today, the Government has confirmed the Energy Price Guarantee (EPG) will be kept at £2,500 for an additional three months.
From April to June, households will be able to save on average £160.
Government support has already cut the typical family energy bill by over £1,300 since October, stopping the average household energy bill from hitting £4,279 a year this winter.
The Chancellor’s three-month extension means households won’t feel the full force of Ofgem’s energy price cap between April and June – which stands at £3,280 – helping to bridge consumers into the summer.