Pay as you go meters supply energy on a prepay basis, instead of paying by direct debit or on receipt of a bill.
You’re given a token, key or smartcard which you can top up with credit at local convenience stores or Post Offices displaying the PayPoint or Payzone sign. Some suppliers have an app or a smart meter where you can top up your credit from home.
If your prepayment runs out, your energy supply is stopped until you've topped up.
Energy charges for pay-as-you-go tariffs can be higher than other options. You’re more likely to be put on a prepayment plan if you’ve had credit problems in the past.
There’s a price cap on prepayment energy meters until 2020
That’s when the UK’s smart meter roll-out was due to end.
The smart meter deadline has been pushed back to 2024. The CMA has recommended the prepayment meter price cap is extended too, but there’s no guarantee.
Below are a few reasons why you might have a prepayment meter in your home:
Prepayment meters are typically installed if you’ve had a poor payment history. The meter requires you to pay upfront, so your energy supplier gains protection
If you’re buying a property that has one already installed, it’ll be due to a previous owner
As a last resort, your energy provider can apply for a warrant to install a prepayment meter soyou can pay off the debt you owe. Don’t worry, you’ll be given plenty of other options to repay your energy bill before this happens
Landlords often install prepayment meters in their properties to guarantee that their tenants won't leave with unpaid energy bills. They’re often found in shared accommodation, including student housing
Prepayment meters can help with your budgeting and to avoid overspending on a credit energy meter. But you could end up paying more than you need to for the gas and electricity that you do use
If you're the homeowner, ask your energy supplier whether it's possible to switch. They'll run a credit check to make sure you can keep up with repayments.
If you’re accepted, an engineer will come to install a replacement meter. You might have to pay a fee for this, but try challenging it. Though you could be able to make back more in energy savings than you pay for installation anyway.
Shop around and compare energy prices after the switch to a credit meter has been made to be sure you’re not paying more than you need to for your energy.
If you're a tenant, switching from a prepayment to a credit meter can be a more difficult process.
The first step in this situation is to contact your landlord – you’ll need their permission to get the meter changed.
Even if the landlord says no, it's still possible to switch to another prepayment energy tariff and, perhaps, a different supplier. Read more in our guide on energy switching for tenants.
Why are prepayment meters more expensive?
You’re likely to be put on a standard variable tariff if you have a prepayment meter – these tend to be your provider’s most expensive plan.
However, suppliers are starting to offer more varied pay-as-you-go tariffs and making them more convenient which could bring prices down.
Page last reviewed: 21 May 2021
Next review due: 19 July 2021
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Between 1 January to 31 March 2020 at least 51% of customers who provided their usage and received a price for switching both gas and electricity saved £302.30.
According to Ofgem, February 2021. Infographic: Bills, prices and profits.