As the UK is dealing with constantly increasing energy prices and the highest inflation in 30 years, energy consumers have been feeling the impacts of the crisis. Those who use direct debit to pay for their bills have time to prepare for their next bill being higher than usual. But those who rely on prepaid meters are already struggling to adjust to the new normal.
What are prepaid meters?
Prepaid meters are a type of energy meters relying on the pay-as-you-go system. Users have to top them up to be able to use energy. Consumers can decide how much money they want to put on the meter every time. To top up they have to go to a local store or do it online. So, the way it works is that they purchase energy before using it. Once an energy-consumer uses everything they have topped up, the electricity (or gas, or both depending on their situation) stops working in their house until they have put more credit on the top up key.
Prepaid meters are not a good choice during crisis
If you use a prepaid meter, your annual price cap has risen to £2,017 rather than £1,971 for those who pay monthly using direct debit. It is a significant difference, especially for vulnerable, low-income families.
Moreover, prepaid meters generally charge people rates that are higher than average. The Guardian reported that ‘low-income households make up the majority of users and the huge hike has prompted fears that more people will be forced to choose between food and fuel as poorer families spend a higher proportion of their income on energy.’
Students are another group that often uses prepaid meters and they also tend to not earn a lot of money. Consequently, people have to try to make the most of daylight and use as little energy as possible.
Prepaid meter users struggling to pay for basic necessities
Having a prepaid meter often means having to top up every week. Because of that it is necessary to carefully plan one’s spendings to include not only supplies such as food but also energy bills.
Low-income families frequently use prepaid meters because they can put smaller amounts into them. There is no need to pay a massive bill all at once.
But as now people have to pay more every time they top up to be able to use the same amount of energy, often they have no choice but to look for savings in other areas. In turn, many have to reduce the number of meals they eat a day or walk to work instead of taking the bus.
Sometimes, after topping up their meter, families have no or very little money left to cover all the other expenses.
Many energy-consumers are struggling to pay their bills due to the ongoing energy crisis but those who have prepaid meters installed seem to be the most affected.