How the Energy Price Cap Affects Prepayment Meter Users

The energy price cap is important for helping prepayment meter customers. It makes sure they are not charged more than customers who pay by direct debit. Still, prepayment customers often face higher energy prices. This is because of standing charges, unit rates, and extra costs associated with key meters and smart prepayment meters.

Ofgem’s price cap level changes every three months. Because of this, many users with prepayment meters are curious about how the price cap in April 2025 will affect their electricity bills and tariff options.

How Does the Energy Price Cap Affect Prepayment Meters?

The energy price cap is a limit set by Ofgem. It shows how much energy suppliers can charge for each unit of energy. It also includes the daily standing charge. This cap applies to prepayment meters, standard variable tariffs, and credit meters.

🔹 From January to March 2025, the price cap for prepayment meters is:

• Electricity: 24.29p for each kWh | 63.82p for daily standing charge
• Gas: 6.12p for each kWh | 32.97p for daily standing charge

Customers who use prepayment meters usually pay £19 more each year than those who pay by direct debit. This is because prepayment customers have higher standing charges.

Why Are Prepayment Meters More Expensive Than Direct Debit?

Many prepayment customers pay more for energy because of what we call the prepayment premium. This affects their overall energy costs.

• Higher daily charges – Prepayment customers pay more to access the energy supply network.
• Fewer competitive plans – Unlike direct debit customers, prepayment users have fewer chances to switch energy suppliers.
• Key meter and app fees – Some prepayment meters need users to add money through a card or an app, which adds more costs.
• Energy price guarantee cancellation – The Energy Price Guarantee, which lowered tariff costs for a while, is no longer in place.

Key Takeaway: If you use a prepayment meter, your electricity bills will probably be higher than those using a credit meter or paying by direct debit.

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Prepayment Meter vs Standard Variable Tariff: Cost Comparison

Users who pay with prepayment will spend more than those who use direct debit. This is unless they move to a less expensive tariff or switch to a credit meter.

Can You Switch From a Prepayment Meter to Direct Debit?

Yes! If you have a prepayment meter and want to switch to direct debit, just follow these steps:

1. Talk to your energy supplier. Ask them if you can change to a credit meter. Some suppliers might need to do a credit check.
2. Ask for a smart meter upgrade. Many energy suppliers will put in a smart meter that lets you pay by direct debit.
3. Look into exit fees. Some suppliers may charge a fee for changing your meter, but many give free upgrades.

Scotland, England, and Wales all go by Ofgem’s rules. This makes it easy for most users to change to direct debit.

How Will the April 2025 Price Cap Impact Prepayment Customers?

Ofgem will update the price cap in April 2025. According to predictions from Cornwall Insight, the cap will go up a bit. This change means that prices will rise for prepayment meter customers.

• Users who pay in advance might face higher daily charges.
• The price cap set for July 2025 may lead to more changes in prices.
• Some regions, like Scotland, might have different unit rates.

If the costs of wholesale energy go up, people who use prepayment options might end up paying more. They can avoid this by changing to a better energy tariff.

Are Smart Meters Better Than Traditional Prepayment Meters?

A smart prepayment meter gives you more options and helps you track your energy use better than key meters.

• It automatically sends your meter readings to the supplier.
• You can top up using an app instead of a physical key meter.
• It is easier to switch to a direct debit plan later on.

If you use a prepayment meter, changing to a smart meter can help you save money. A smart meter will also allow you to control your energy use better.

How to Save Money If You Have a Prepayment Meter

• Switch to a credit meter – Talk to your supplier about changing to direct debit payments.
• Apply for support schemes – Find out if you qualify for the Winter Fuel Payment and Warm Home Discount.
• Use less energy – Keep track of your energy use to prevent high bills.
• Look for prepayment-friendly tariffs – Some suppliers give lower unit rates for prepayment customers.

Final Thoughts: Is Prepayment the Right Choice?

• Prepayment meters cost more than direct debit plans. They have higher fees and fewer tariff options.
• Changing to a credit meter or a smart meter can help you save on energy costs.
• The price cap changes in April 2025 might raise costs, so now is a good time to look for better energy deals.

If you have a prepayment meter, check energy prices now. This will help you save money and avoid paying too much in 2025!