A Ten Minute Rule Bill introduced by Kenny MacAskill MP received its First Reading in the House of Commons on 19 October 2022. The Energy Costs (Pre-payment Meters and Social Tariffs) Bill seeks to abolish higher standing charges for prepayment customers and to require social tariffs1. It is due for Second Reading on Friday 24 March 20231.
Prepayment meters (PPMs) require customers to pay for electricity or gas before they use it, on a pay-as-you-go basis, with credit bought usually by key or smart card and added to the meter1. In 2020 Ofgem reported 4.3 million electricity and 3.4 million gas prepayment meter customers1. Ofgem said its data showed 1 in 7 customers self-disconnected during 2019, with Citizens Advice data suggesting numbers could be higher, and that around half of those self-disconnecting appeared to experience a negative impact1.
The bill addresses a standing charge gap that has persisted across cap regimes. Under the Energy Price Guarantee (EPG), which replaced the default tariff cap from 1 October 2022, PPM customers pay a lower unit price for electricity than direct debit customers but a higher unit price for gas, and higher standing charges than all other customers for both fuels1. The EPG limits for 1 October to 31 December 2022, as Great Britain averages including VAT, were:
| Payment method | Electricity standing charge (p/day) | Gas standing charge (p/day) | Dual fuel standing charge (p/day) |
|---|---|---|---|
| Direct debit | 46.4 | 28.5 | 74.9 |
| Standard credit | 52.4 | 33.5 | 85.9 |
| Prepayment meter | 51.4 | 37.5 | 88.9 |
Before the EPG, the default tariff cap for 1 April to 30 September 2022 was set so an average dual fuel customer paying by direct debit would pay £1,971 per year, and a PPM customer £2,0171. On 26 August 2022 Ofgem announced the cap would rise from 1 October 2022 to £3,549 for direct debit and £3,608 for PPM customers1. The Government announced the EPG on 8 September 2022, running from 1 October 2022 to 31 March 20231.
The bill's provisions sit alongside existing supplier obligations. Ofgem's November 2022 letter to suppliers expressed "concern over remote switching of smart meters to prepayment mode"1. On 30 September 2022 Citizens Advice published a report calling for a "winter moratorium on moving customers to prepayment meters under warrant and on switching smart meters to prepay in an attempt to recover debt", to remain until April 20231. Warrant charges for debts are capped at £150 for everyone else1.
"The Bill was read a first time on 19 October 2022 and is due for Second Reading on Friday 24 March 2023 (see Bills webpages)."
Why it matters for households
For a household on a prepayment meter, the standing charge is deducted from credit whether or not any energy is used, so a higher daily charge draws down a top-up faster and shortens the period before the meter can cut out. The bill targets that gap directly, alongside the separate question of a social tariff for energy. The standing charge figures above show PPM customers paying 88.9 pence per day on dual fuel against 74.9 pence for direct debit, a difference of 14 pence per day, or about £51 a year, before any difference in unit rates. For a home already managing credit tightly, that is money leaving the meter before a single unit is consumed. The bill also engages the wider standing charge reform debate and the rules on prepayment and vulnerable customers, which govern when a meter can be installed for debt and what support suppliers must offer. Whether the bill changes anything depends on its passage; a Ten Minute Rule Bill has no automatic effect on tariffs or on household energy independence.
What happens next
The bill is due for Second Reading on Friday 24 March 20231. A Commons Chamber debate on self-disconnection of prepayment meters was scheduled for Thursday 15 December 2022, chosen by the Backbench Business Committee and opened by Anne McLaughlin MP1.
Sources1 cited
- Subject:, researchbriefings.files.parliament.uk