Prepayment meter customers were charged the same unit rates and standing charges as direct debit customers from April 2023, following confirmation in the Budget 20231. The change applies to the rates set under the Energy Price Guarantee and the Ofgem price cap1.
The Energy Price Guarantee was held at £2,500 for an average household between April and June, rather than rising to £3,000 as previously planned2. From July, industry forecasters expected the Ofgem price cap to fall below £2,500 for the rest of the year2. Which? used Cornwall Insight price cap forecasts published on 15 March 2023 for its figures, and noted that newer predictions released on 31 March 2023 were not published in time to be included1.
The consumer body estimated that a median-usage household would pay £135 more in 2023/24 than in 2022/23, with an annual bill rising from £1,983 to £2,1182. For the lowest 10 per cent of incomes, it estimated an increase of £209, which it said was £75 more than the rise faced by median-usage consumers1. The larger increase for lower-income households was attributed to their lower energy use, which means they gain less from falling unit prices, while the loss of the £400 Energy Bill Support Scheme is the same for everyone2. That scheme paid £400 to all UK households between October 2022 and March 2023, in monthly instalments of £66 or £67, and was not renewed in the Spring Budget1.
Which? set out income thresholds for the bottom decile: a single person household earning less than £9,800 a year, or a couple with two children earning less than £20,500 after taxes and benefits1. It also modelled an Ofgem consumer archetype, D6, associated with characteristics including low income, disability, fuel debt, prepayment metering and social housing, estimating costs £119 higher in 2023/24, at £2,418 against £2,299 over the previous 12 months2.
"The Budget 2023 confirmed that prepayment meter prices would be the same as direct debit prices from April 2023 onwards"
| Measure | Detail |
|---|---|
| Prepayment and direct debit rates | Equalised from April 20231 |
| Energy Price Guarantee | Held at £2,500 for an average household, April to June 20232 |
| Energy Bill Support Scheme | £400 per household, October 2022 to March 2023, not repeated1 |
| Median-usage household bill | £1,983 in 2022/23 to £2,118 in 2023/242 |
| Lowest income decile | £209 higher in 2023/24 than 2022/231 |
Why it matters for households
For homes on prepayment meters, the equalisation removed a long-standing surcharge on the unit rate and standing charge, so the cost of a unit of gas or electricity no longer depends on how the household pays. That matters for energy independence in the narrow sense that topping up no longer carries a price penalty relative to a monthly direct debit, though the two payment methods still differ in how costs fall across the year.
Which? noted that prepayment customers cannot spread costs across the year and face higher bills in the colder months, and that this group faces disconnection if a meter is not topped up2. The same briefing said the ending of the £400 scheme would be felt most sharply between October 2023 and March 2024, when the discount was received the year before2. The price cap rates by payment method now align for prepayment and direct debit, while standard credit remains a separate set of rates.
What happens next
The 2022 Autumn Statement committed to a new approach to consumer protection, such as a social tariff, in place by April 20241. Which? called for a social tariff based on household income and energy usage, without a cliff edge based on benefits eligibility, and said progress needed to be made urgently1. It cited Citizens Advice and Social Market Foundation estimates that just 45 per cent of consumers in the poorest 10 per cent of households claim means-tested and disability benefits2. No repeat of the Energy Bill Support Scheme for winter 2023/24 was announced in the Spring Budget2.