Families till using old-style prepayment meters may be able to beat next month's electricity price rise if they act now.
Next Saturday, October 1, prepay energy prices are rising by 27% on average. But if you've got an older, non-smart electricity meter, you may be able to legally stockpile electricity credit before prices rise, which could mean decent savings if you can afford to do so.
The loophole - which only works on old-style electricity prepayment meters, not old-style gas pre-payment meters or either type of smart meter - lets you top up your meter now and pay the current rate for your electricity until you have to top it up again. Many pre-payment meter holders did this before April's price cap increase, but according to money Saving Expert Martin Lewis, it has been "tough to nail down" which suppliers will be allowing the same to happen this time round.
Read more: Forget £2,500 - how much will your family pay for energy next month?
There are around four million households on prepayment meters in the UK, according to the energy regulator Ofgem. Some homes have always had them. Other households, however, will have had them fitted by suppliers after going into debt on their energy bills. Landlord often have prepayment meters fitted for their tenants. If you top up your meter by app, on the internet or by your phone, you have a smart meter. If you have to take a key - or token - to a Paypoint or Payzone point in a newsagent's, garage or Post Office to top it up, you still have an old-style meter and this hack will work for you.
This time round, the trick has been slightly complicated by the Government's cost of living support package, which was introduced in May to counteract high winter bills. Under this scheme, if you have a traditional top-up meter, you'll get a voucher each month by post, text or email, of either £66 or £67, which you'll need to redeem by topping up as normal. However, you only have three months to use each voucher – so you need to ensure you have enough space on your meter to use the vouchers before they expire. The scheme ends on 30 June 2023, so you must have claimed everything by then.
Moneysavingexpert.com has suggested that, as most suppliers have said you can use these vouchers for gas or electricity, provided you have both with the same supplier, you could use the vouchers for your gas, to avoid topping up your electricity meter until you've used up all your credit.
Prepayment meter customers are always hit with higher prices than those who pay for their bill after they used the energy, and prior to Liz Truss's energy price guarantee on September 8, prepayment meter customers would have faced an annual bill of £3,608 for average usage, compared to £3,549 for credit customers, from October 1. The guarantee froze the bill at £2,500 annually for the average household, which is still an increase of more than £500 a year comparted to last winter. And remember, despite its name, the energy price cap does not mean a limit on how much you can be billed.' Average' use is just that - use less and you'll pay less, use more and you'll pay more.
With a gas prepayment meters when prices change, the new rates are transmitted from suppliers to top-up machines in stores weeks in advance, so you will pay this rate when you top up after October 1. With smart prepayment meters, the rates can be updated remotely, so you'll automatically start paying the new rates on Saturday October 1.
Most suppliers have told Moneysavingexpert.com that they won't look to recover the extra you should have paid when you use electricity paid for at the pre-October 1 rate, although there are no guarantees, and firms could always change their approach. The exceptions are Scottish Power and E.on/E.onNext, who have said that the trick will not work with their meters.
So is it worth doing? According to Martin Lewis, the answer is yes. "If you're with one of the companies where it's possible, and topping up in advance won't cause you a cashflow issue, you may as well do it," he said. "In the best case scenario, as happened last time for many, you will be keeping the cheaper current rates for longer. In the worst case scenario, you'll get the cheap rates but then they'll claw back the extra, which leaves you no worse off than you would have been if you hadn't done it. So if you can afford to do it, it's worth a try."
However, he warned about trying to get around the price rise if you have a credit account by inflating your meter reading ahead of a price increase, so more of your usage is charged at the lower rate. Unlike prepay, you shouldn't do this as it's fraud, but remember to take a meter reading as late as possible on September 30 in case of any disputes about usage at the new rate.
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