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Restricted meters

Key points

  • Restricted meters are found in properties with more than one meter, where energy is only available through each meter at particular times of day, and different rates are charged for the different meters
  • The CMA differentiates between Economy 7 and restricted meters
  • Restricted meter customers face particular problems finding information on the right tariffs and switching to them
  • The CMA plans to help households on restricted meters switch to cheaper, single-rate tariffs without having to replace their meter

Energy customers on so-called restricted meters have been highlighted as a group that pays significantly over the odds for their gas and electricity. Find out more…

In March 2016 the Competition and Markets Authority (CMA) announced the provisional decisions of its long-running plan to reform the UK's gas and electricity market.

Included in the report was a section on 'restricted meters', a term for the energy lexicon that would have been new to many.

The report grouped restricted meters in the category of restricted hour tariffs (RHTs) and said that there were over four million such RHTs in the UK, a figure that equated to about 17% of all customer accounts.

Such tariffs occur in properties with more than one meter, where energy is only available through each meter at particular times of day, and different rates are charged for the different meters.

The majority of RHTs are the well-known Economy 7 meters, which allow for customers to be charged lower rates for electricity at times when there's less demand.

However, the CMA said that about 700,000 restricted meters (or 2% of all customer accounts) were non-Economy 7 meters and it indicated that these customers seemed particularly vulnerable to paying over the odds for their energy bills.Gocollective energy switch

This left them struggling to identify with the CMA's core message for reform of the market, which was encouraging consumers to shop around for the right deals, thereby taking advantage of savings and increasing competition between suppliers.

The CMA wants the 700,000 households on restricted meters to be able to switch to cheaper, single-rate tariffs without needing to have a replacement meter.

Why restricted meter customers find it hard to shop around

The CMA said that (non-Economy 7) restricted meter customers "face particularly strong barriers to accessing and assessing information and barriers to switching supplier and/or tariff" and that, for them, "understanding the options available to them and switching supplier is substantially more difficult than it is for customers on other meter types".

Switching for restricted meter customers may require them to replace their existing meter at their own cost

It was found that 79% of restricted meters were still supplied by the historical energy supplier, and for certain types of restricted meter the figure was closer to 100%.

When looking at the wider market, just 33% of all electricity meters and 37% of all gas meters were still supplied by the historical energy supplier.

Problems in accessing information included the fact that restricted meter tariffs are not supported by online search tools; this includes the tools offered by energy companies themselves, as well as the services offered by price comparison websites such as Gocompare.com.

When it comes to actually switching, it was found that restricted meter customers didn't have a choice of supplier offering bespoke tariffs.

In theory it should be possible for them to switch to a single-rate tariff or an Economy 7 one, whether such a deal is offered by their current supplier or a rival supplier.

But, in practice, this may require them to replace their existing meter at their own cost, something that would also involve a loss of functionality.

Such a meter switch may even require home rewiring, a problem that could prove particularly difficult for a tenant as opposed to a homeowner.

How much could restricted meter customers save with easier switching?

Energy suppliers have cost advantages when it comes to supplying customers on restricted meters.

See also:

But, despite this, the CMA said that, in the second quarter of 2015, 69% of customers on restricted meters would have saved on their energy bills if they were on the cheapest single-rate tariffs available on the market.

Of those who would have saved, typical savings would have meant cutting around 18% off their bill.

The CMA noted significant differences depending on the supplier; with two of the 'big six' energy suppliers, it was found that over 85% of their customers would have been better off on the cheapest single-rate tariff.

By Sean Davies