Power companies won’t be able to charge customers additional fees if they use pay-as-you-go meters as part of Jeremy Hunt’s budget crackdown.
- The ‘Prepaid Premium’ that had affected four million homes will end as of July
- Millions are set to save £45 a year on their energy bills per year, Treasury says
- Businesses have been temporarily banned from installing meters, but the ban will be lifted in April
Energy companies will not be able to charge their customers more if they use prepaid meters in the reforms that will be announced in Jeremy Hunt’s budget.
The Chancellor will put an end to the so-called ‘prepaid premium’ that has affected more than four million households with pay-per-use meters since July.
As a result, millions of households will save £45 a year on their energy bills, according to the Treasury. Households that use the meters currently pay more on average than direct debit customers because the companies that manage the meters pass the cost on to users.
The Treasury estimates the change will cost the taxpayer £200m.
Hunt described the system as “patently unfair” and added: “We’re going to put an end to that.”
The Chancellor will put an end to the so-called ‘prepaid premium’ that has impacted more than four million households with payment meters, starting in July
Households that use the meters currently pay more on average than direct debit customers because the companies that manage the meters pass the cost on to users
‘Starting in July, four million households will not pay more than those who are domiciled. We’ve already cut energy bills by almost half this winter, and this latest renovation is further proof that we’re always on the side of families.’
Prepaid meters came under scrutiny earlier this year when it was revealed that energy giant British Gas sent debt collectors to ‘break into homes’ and force pay-as-you-go meters to adjust on the ‘vulnerable’ clients.
Power companies can obtain court orders giving them legal rights to enter people’s homes and place prepaid meters if customers have not paid their bills. The clients they must recharge to continue receiving gas supply, and if they don’t, they risk having their heat cut off.
Subsequently, companies were temporarily prohibited from installing meters under a court order, but the order will expire at the end of this month.
Energy Secretary Grant Shapps said: “While the actions I pushed through meant forced installations are on hold, arrest warrants have not passed and Ofgem is toughening up its reviews, our changes will ensure families are not simply penalized by how they heat their house.
Elsewhere in the Budget, the Chancellor is expected to scrap a planned £500 increase in energy bills, which was due to take effect next month.
For the average household, bills could now stay at around £2,500, rather than rising to £3,000 as previously announced.