Households that pay their energy bills by cash or cheque pay an estimated £136 a year more on average than other customers, according to recent reports by the energy regulator Ofgem1. The figure is cited in guidance published on 5 September 20251.
Cash and cheque payments remain available from most suppliers to people who prefer to pay quarterly, with usage for the previous three months billed at the end of each quarter1. Payment can be made by posting a cheque to the supplier or by paying in cash or cheque through a bank or post office1. Suppliers argue the higher cost is necessary to compensate for the costs of processing cash and cheque payments, and for the fact that more underpayments and debt come from customers paying this way1.
The gap reflects the discount nearly all suppliers offer to customers paying by Direct Debit, which ensures prompt, regular payments1. Cash and cheque customers also face limited availability of new tariffs, as many are only open to those paying by Direct Debit1. Other payment routes carry their own trade-offs: standing orders give the customer sole control over amounts and dates, but most new tariffs do not offer them because suppliers have less guarantee of payment1; card payments over the phone or online allow a bill to be checked before payment but carry no discount1; and prepayment meters, topped up in advance by key, card or token, are more expensive to run, can be difficult to switch away from, and can leave a home without electricity if the meter is not kept topped up1.
| Payment method | Cost and access notes |
|---|---|
| Cash or cheque | £136 a year more on average; many new tariffs unavailable1 |
| Direct Debit | Discount offered by nearly all suppliers; monthly, quarterly or variable1 |
| Standing order | No discount; most new tariffs do not offer it1 |
| Card (phone or online) | No discount; bill can be checked before paying1 |
| Prepayment meter | More expensive to run; harder to switch away from1 |
"Recent reports by the energy regulator Ofgem estimate that cash and cheque customers end up paying £136 a year more on average for their energy"
Why it matters for households
The £136 figure is an average, and it sits alongside a structural difference in what is on offer: a household paying by cash or cheque is not only paying more for the same energy, it is also excluded from many of the tariffs that set the cheapest prices1. That narrows the options available when a fixed deal comes up for renewal, and it means the cost of the payment method is compounded by the cost of the tariff it rules out. For a household's energy independence, the payment method is one of the few parts of a bill a customer controls directly, and it interacts with how much of the bill can be checked before money leaves the account. Paying by cash or cheque allows the bill to be seen before payment, which helps where a charge is disputed1, while Direct Debit removes that check but brings the discount and access to more tariffs1. The ways to pay an energy supplier each carry a different balance of cost, control and access, and the price cap sets the underlying rates that these discounts and premiums are applied to. The regulator's role in setting and monitoring those rates is set out in Ofgem's remit, and the wider link between billing arrangements and household control over supply is covered in energy bills and energy independence.
What happens next
No further dates for changes to payment-method pricing have been reported1.