MSE News: Prepayment meter customers won't pay more than those on direct debits from July

MSE_Oliver

Prepayment meter customers typically pay more for their energy than those paying by direct debit, but the Chancellor Jeremy Hunt says from July the 'prepayment penalty' will end, cutting bills for over four million households.

Read the full story:
Prepayment meter customers won't pay more than those on direct debits from July, the Chancellor says

nrmsmith

Does that mean that the rest of us will have the daily standing charge removed?

I always understood that one of the reasons that pre-payment customers paid more was because they don’t pay a standing charge directly?? I still have to pay nearly 80p a day even when I don’t use any energy at all.  

MattMattMattUK

nrmsmith said:

Does that mean that the rest of us will have the daily standing charge removed?

No.

nrmsmith said:

I always understood that one of the reasons that pre-payment customers paid more was because they don’t pay a standing charge directly?? I still have to pay nearly 80p a day even when I don’t use any energy at all.  

We all have to pay standing charges, they are there to cover the cost of the network, of maintaining it and being connected to it. We all have to pay them if we have a connection to the grid.

Spoonie_Turtle

nrmsmith said:

I always understood that one of the reasons that pre-payment customers paid more was because they don’t pay a standing charge directly??

Not at all, if you look at any of the suppliers' rate tables you'll see prepayment customers pay usually a higher standing charge (and sometimes lower unit rate, for electricity).

Mobtr

I thought most companies charged less for pp these days. Never quite understood why they paid more for years. Surely the company is getting the money upfront unlike any other payment method. Yes the meters are more complicated & may need the odd engineer visit it they went wrong but it’s not often 

bristolleedsfan

Mobtr said:

I thought most companies charged less for pp these days. Never quite understood why they paid more for years. Surely the company is getting the money upfront unlike any other payment method. Yes the meters are more complicated & may need the odd engineer visit it they went wrong but it’s not often 

Issuing cards costs money, Paypoint etc does not operate for free.

nrmsmith

Spoonie_Turtle said:

Not at all, if you look at any of the suppliers' rate tables you'll see prepayment customers pay usually a higher standing charge (and sometimes lower unit rate, for electricity).

So you’re saying that if a prepayment customer loaded £10 onto their meter then turned everything electrical off, so they didn’t use any electricity at all, that the £10 would all get slowly used up because of a standing charge being charged to them?

EssexHebridean

nrmsmith said:

Spoonie_Turtle said:

Not at all, if you look at any of the suppliers' rate tables you'll see prepayment customers pay usually a higher standing charge (and sometimes lower unit rate, for electricity).

So you’re saying that if a prepayment customer loaded £10 onto their meter then turned everything electrical off, so they didn’t use any electricity at all, that the £10 would all get slowly used up because of a standing charge being charged to them?

Yes - of course it would. How else would the SC be met? 

If a DD customer turned everything off, so didn't use any electricity at all, the SC would still accrue on the account, and if a payment on receipt of bill customer turned everything off and didn't use any electricity at all, they would receive a bill for the SC only. 

nrmsmith

EssexHebridean said:

nrmsmith said:

Spoonie_Turtle said:

Not at all, if you look at any of the suppliers' rate tables you'll see prepayment customers pay usually a higher standing charge (and sometimes lower unit rate, for electricity).

So you’re saying that if a prepayment customer loaded £10 onto their meter then turned everything electrical off, so they didn’t use any electricity at all, that the £10 would all get slowly used up because of a standing charge being charged to them?

Yes - of course it would. How else would the SC be met? 

If a DD customer turned everything off, so didn't use any electricity at all, the SC would still accrue on the account, and if a payment on receipt of bill customer turned everything off and didn't use any electricity at all, they would receive a bill for the SC only. 

Ok, well you learn something new everyday. 

I know the DD customer pays a SC every day whether they use energy or not.  

But I was under the impression, probably from something someone said on the radio way back, that the reason pre-payment meter owners paid a higher rate than credit account customers was because the SC was “lumped in” to the unit rate.  

EssexHebridean

No - far from it in the case of electricity - the prepay unit rates are frequently lower than the DD rates. 

I suspect this comes from the various bits of nonsense spouted in the media where they repeatedly insist that Prepay is "always far more expensive" - it IS more expensive in the case of gas, but definitely not where electric is concerned. 

Scot_39

Mobtr said:

I thought most companies charged less for pp these days. Never quite understood why they paid more for years. Surely the company is getting the money upfront unlike any other payment method. Yes the meters are more complicated & may need the odd engineer visit it they went wrong but it’s not often 

Right now - as per Ofgem price cap and govt EPG - that only applies as fare as I can see to electricity units.

Gas SC £31 per year nationally  - Electric SC around £15-20 on a quick scan - and gas units - EPG - around 0.5p more in average than DD 10.3p inc VAT average.

The BBC article talks of around a £45 saving from July.

The oonly exception might be firms like was it Octopus - who decided not to pass Ofgems latest price changes onto certain PP customers in January (perhaps only the electric E7 ones ? )  .  But not fully aware of the difference(s) that made.