The government announced in the Spring Budget, published on 15 March 2023, that it would align charges for comparable direct debit and pre-payment meter (PPM) customers, so that households on pre-payment meters no longer pay more for their energy than those paying by direct debit1. The measure was set out in the executive summary of the Budget alongside the decision to hold the Energy Price Guarantee (EPG) at £2,500 for a further three months from April 20231.
The Budget stated that the government "will also align charges for comparable direct debit and Pre-Payment Meter (PPMs) customers, ensuring that those on PPMs no longer pay a premium for their energy costs"1. The document did not set out a date for the change, a mechanism for delivering it, or the level at which the aligned rates would be set; none of these details appear in the Budget text1.
"the government will also align charges for comparable direct debit and Pre-Payment Meter (PPMs) customers, ensuring that those on PPMs no longer pay a premium for their energy costs"
The Budget also confirmed the EPG would be maintained at £2,500 for a further three months from April 2023, and said the guarantee had reduced peak CPI inflation by 2.5 percentage points1. It put total support to households with higher bills at £94 billion, equivalent to £3,300 per household on average, across the financial year and the next1. The Office for Budget Responsibility expected inflation to fall from its peak of 10.7% in the fourth quarter of 2022 to 2.9% in the fourth quarter of 20231. Wholesale energy prices in 2023 were forecast at £1.50 per therm, less than half the £3.40 per therm assumed at the November 2022 forecast1.
On the supply side, the Budget announced the launch of Great British Nuclear to support new nuclear builds, made up to £20 billion available for Carbon Capture, Utilisation and Storage, and extended the Climate Change Agreement scheme for a further two years to encourage energy efficiency1. It also noted the creation of four new departments in February, including the Department for Energy Security and Net Zero1.
| Measure | Detail as given in the Budget |
|---|---|
| Pre-payment alignment | Charges for comparable direct debit and PPM customers to be aligned1 |
| Energy Price Guarantee | Maintained at £2,500 for a further three months from April 20231 |
| Household support total | £94 billion, equivalent to £3,300 per household on average1 |
| Wholesale gas forecast for 2023 | £1.50 per therm, against £3.40 assumed in November 20221 |
Why it matters for households
Under the price cap, the rates a household pays have historically depended on how it pays. Pre-payment customers have faced a separate, higher set of unit rates and standing charges than those on direct debit, and the Budget committed to removing that difference for comparable customers1. For a household on a pre-payment meter, that changes the arithmetic of what a unit of gas or electricity costs relative to a neighbour paying by direct debit, though the Budget did not say by how much or from when1.
The commitment sits alongside the three-month extension of the Energy Price Guarantee at £2,500, which caps what a typical household pays rather than the price of each unit1. The two measures work on different parts of a bill: the guarantee limits the total for a typical household, while alignment addresses the gap between payment methods1. For a home weighing up how it pays, the practical effect is that the payment method itself should no longer carry a price penalty, leaving tariff choice and usage as the remaining variables.
What happens next
The Budget set no implementation date for the alignment of direct debit and pre-payment charges, and no further detail on how it would be delivered has been reported1. The EPG was to remain at £2,500 for three months from April 20231.