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Prepayment meters
A substantial number of people have a prepayment meter – many were installed to recover a fuel debt.1Ofgem, Vulnerable Consumers in the Energy Market: 2018, 18 June 2018 Frequently marketed as a ‘pay-as-you-go’ budgeting method, there are several types of prepayment meters, including smart, card and key meters. Some electricity prepayment meters can operate with Economy 7 and other variable rate tariffs.
If your supplier has gone out of business, you should not lose supply and can top-up your meter in the normal way. Ofgem will contact you when a new supplier has been appointed. Any arrears you have will normally be transferred to the new supplier. Contact Citizens Advice or Advice Direct Scotland if you have any problems.
1     Ofgem, Vulnerable Consumers in the Energy Market: 2018, 18 June 2018 »
Collecting arrears
Prepayment meters can be set to collect a fuel debt. They allow you to pay for your supply of fuel, a daily standing charge and extra for any arrears you owe. It is important to note that the settings for these charges operate on a regular, usually weekly, basis. If you are due to spend time away from your home (eg, on holiday or in hospital), ensure that your meter is ‘topped-up’ with enough credit to cover these charges.
If you are paying off a fuel debt via a prepayment meter, your supplier is meant to take into account your ability to pay when determining the weekly arrears recovery amount. If you feel the arrears repayment level is unaffordable, you may be able to negotiate with your supplier (especially if you can be considered vulnerable) to have the arrears recovery level set on a par with Fuel Direct (see here) – ie, £3.85 a week.
Emergency credit
If your fuel runs low or runs out, you can use an emergency button on the meter to obtain a small amount of credit (typically worth £5). The next time you top up, the credit is used to pay for the emergency fuel – no more fuel is available until this has been paid. From December 2020, under new standard licence condition 27A, suppliers must offer:
    ‘friendly-hours credit’ – this is emergency credit provided overnight (typically between 6pm and 9am), at weekends and public holidays, when top-up points may be closed and a prepayment meter runs low or runs out; and
    ‘additional support credit’ – this is provided to customers in vulnerable circumstances who may have exhausted other options.
These credits are repaid at the next top-up but suppliers should consider your ability to pay and agree an affordable rate. Where it is not technically feasible and/or outside the supplier’s control to offer emergency credit and friendly-hours credit, the supplier must take all reasonable steps to provide you with alternative short-term support.1Condition 27A.3 SLC
If the emergency credit runs out and you are unable to top-up, contact your supplier to discuss an affordable repayment plan.
Some suppliers offer an alert service where you or someone you nominate (eg, a friend or family member) gets a text message or email when your credit is running low.
1     Condition 27A.3 SLC »
‘Self-disconnection’ is an interruption to energy supply to prepayment meters because of a lack of credit on the meter or account. With insufficient funds in a prepayment meter, you effectively disconnect yourself, rather than the supplier having to take steps to enforce any debt. Reasons for self-disconnection can include:1Citzens Advice, Switched on: Improving support for prepayment consumers who’ve self disconnected, April 2018
    insufficient money available to top-up;
    forgetting to top the meter up in time;
    not realising the meter was low on credit.
Under SLC 27A, suppliers must identify and support customers who self-disconnect and offer support to vulnerable customers who might be self-disconnecting and self-rationing (deliberately limiting fuel use to save money). Suppliers must take into account your ability to pay when calculating instalments.2Conditions 27A.1 and 27.8 SLC
Isabel has a mental health condition which makes her forgetful and she regularly self-disconnects her prepayment meters when she forgets to buy top-ups. Her son contacts her supplier who offers to replace her prepayment meter for a standard meter and places her on its Priority Services Register.
Ian and Scott have made a claim for universal credit (UC) and are waiting for their first payment. They do not have enough money to top-up their prepayment meter. They can apply for a short-term advance of UC. They will have to repay the advance by deductions from future payments, but they will not be charged interest.
Imran had a prepayment meter installed to collect arrears. He has an outstanding balance of £182. The prepayment meter was deducting a large proportion of all top-ups to repay the debt and the standing charges. During the winter, Imran found this unmanageable and was regularly self-disconnecting. The supplier agreed to reduce the amount deducted from each top-up for arrears.
Priya’s employment and support allowance has been stopped and she is appealing the decision. She has no income while the appeal is pending and could not top-up her meter. Her adviser contacts a specialist support organisation. It negotiated with Priya’s supplier which agreed to provide discretionary credit which she will pay back at £3.75 a week. The supplier also awards a warm homes discount.
Help if you are facing self-disconnection
– Contact your supplier and explain your situation. It could help with an application to a trust or grant scheme, offer emergency prepayment support or make sure your energy account is set up to meet your specific needs. If your meter is collecting arrears, the supplier may be able to reduce the proportion of the top-up used for arrears. Suppliers are obliged to set repayments at an affordable level. Draw up a financial statement (see p000) to help you negotiate a reduction in your debt repayments. If your supplier is unhelpful, contact a local advice service which may be able to contact the supplier again on your behalf.
– Check with your supplier whether you are eligible for a Warm Home Discount (see here).
– Get help from a local advice agency such as Citizens Advice or a law centre. They might be able to contact energy trusts for help (see here) or a specialist advice organisation (see here) on your behalf.
– See if you can get help from your local welfare assistance scheme (see here).
– If you are waiting for your first payment of UC, you may be able to get a short-term advance. You will have to repay the advance by deductions from future payments, but you will not be charged interest.
– If you are considered vulnerable or are in a vulnerable situation (see here), contact a specialist advice organisation.
– If you have been referred to a foodbank or are working with a local energy advice/housing association or other body, you may be able to get a fuel voucher. This can provide a top-up of two weeks’ worth of fuel for prepayment meters. Note: this is only available in a limited number organisations which changes frequently.
– Check that you are receiving all the benefits and tax credits you may be entitled to.
1     Citzens Advice, Switched on: Improving support for prepayment consumers who’ve self disconnected, April 2018 »
2     Conditions 27A.1 and 27.8 SLC »
Advantages of prepayment meters
    They can be useful as a budgeting aid, as they restrict your use of fuel according to your means. You are forced to become aware of your fuel consumption. This can be useful if your budget is limited, but you should also consider the risk of self-disconnection. Many customers choose to retain their prepayment meter as a budgeting aid even after arrears have been paid off.
    Ease of adjustment – the smart card or key reads your meter and conveys the information to your supplier. If your supplier agrees to change the setting, there is no need for a visit, as the card/key adjusts the setting of the meter the next time you charge it up and use it. Smart prepayment meters can be adjusted remotely in real time.
    Meters can be reset to pay off arrears as an alternative to disconnection.
Disadvantages of prepayment meters
    These meters should never be installed if you are at risk of leaving appliances turned on after the money has run out, or are incapable of operating the meter or obtaining the top-ups to operate them.
    There are hidden costs. If you cannot afford to buy much fuel at any one time, you may need to make frequent journeys to the nearest charging point. The extra cost of travel is effectively part of your fuel cost. In this situation, it may save you money to move to a smart prepayment meter which will enable you to top-up online or using an app if you can.
    You cannot spread the cost of large winter bills over the whole year if you pay for your fuel in advance week by week. A payment plan might be preferable if you could not afford to pay for your heaviest weeks’ consumption from your weekly income.
    ‘Self-disconnection’ is a problem if you cannot afford to top-up your meter. Fuel costs may take up too high a proportion of your income, particularly if you live in a property that is hard to heat or if your income is low.
    Paying back arrears and emergency credit can result in hardship. If a meter is set to collect arrears, a supply of fuel may not be available until the arrears charge has been paid. With some types of meters if you are away from home or cannot afford to charge the meter for a week, you have to insert two weeks’ arrears before you can obtain a supply. With most types of prepayment meter, if you have used your emergency credit, you also have to pay the amount of the emergency credit before obtaining a supply. In some situations (eg, if you come out of hospital), you may be able to persuade the supplier to reset your meter – check first that this will not involve any extra cost.
    Your repayment of arrears may be highest when you can least afford it if you use the crude mechanical gas prepayment meters. These operate by overcharging for each unit of gas used, so the more gas you use, the more you pay towards your arrears. This does however mean there is no problem if you are absent from your home for any period of time – you will always get gas for every top-up.
    Using the meters can be difficult, particularly if you have visual problems or disabilities. Note, however, that meters can often be re-sited free of charge to make them easier to use and some suppliers have accessible IHD units for blind and partially sighted people (see here).
    Obtaining top-ups may present problems. Frequent journeys to buy them may present difficulties if you are caring for small children, are disabled or have limited mobility, or are in full-time work. It may be difficult to obtain top-ups outside shopping hours. Vending machines have had problems with jamming, vandalism and becoming full. You should consider the safety aspects of trying to obtain cards out of hours. Be sure to keep your receipts when charging keys/cards so that you have a record of payments.
    Keys can be easily lost or mislaid. If you lose your key, ask the supplier to replace it.
    You may be denied the option of changing to Fuel Direct (see here) to pay your arrears if you already have a prepayment meter that has been reset to recover arrears.