Experts warn that ‘unsustainable’ prepayment meters could lead to households spending a third of their income on energy
Households in the UK with prepayment meters could see their energy bills cost up to a third of their household income this winter, new research warns.
The Resolution Foundation’s findings show the most vulnerable households will be hardest hit, as higher prices and colder weather will have a disproportionate impact.
The UK’s four million households on prepayment meters will need to spend 30% or more of their income on energy bills (net of housing costs) in December, January and February.
These meters are generally concentrated in low-income households in the UK. They are most commonly installed in rental properties, with users paying energy bills when and before use.
Energy bills start rising again in 2024 (PA)
People in these homes “remain neglected,” the report said, adding that ” [prepayment meters] Concentrated among poorer households, this drain on household finances is unsustainable, leaving families sitting in cold, dark homes.
The researchers also noted that more than half of households with these meters were in debt to their energy supplier because the debt was paid when the meter was topped up, exacerbating the difficulty of keeping warm.
Previous analysis by Citizen’s Advice found that 1.7 million people in the UK ran out of prepaid meter credit last year, while 800,000 people were without electricity or gas at all for at least 24 hours.
Energy bills for all households will increase from January as Ofgem’s energy price cap rises by 1.2% to £1,738. Following a sharp 10% rise in October, another rise is expected in April.
Jonathan Marshall, chief economist at the Resolution Foundation, said: “For many households, the recent energy crisis is a period they wish to forget. But for the millions of households using prepaid meters this winter, it feels like it never was. Finish.
“Continued high energy costs and heavy use during the cold winter mean households using prepaid meters will spend nearly a third of their household budgets on energy over the next three months. These high costs are likely to squeeze depressing other vital expenditures and increasing the risk of people rationing their energy use in ways that harm their health.
A spokesman for the Department for Energy Security and Net Zero said: “We are doing everything we can to support vulnerable households this winter, including through the £150 warming discount, which is expected to support 3 million eligible households, while around 1.3 million households in England are at risk. Bills will continue to receive winter fuel payments of up to £300.
“In November, UK energy companies worked with the government to publish the Winter 2024 Commitment, committing £500m of industry support to bill payers this winter. This includes credits on bill or advance payment schedules, and an enhanced debt write-off scheme and hardship funds.
“We welcome the steps taken by Ofgem to protect prepayment meter customers and we will continue to work closely with them to ensure that suppliers only install involuntary prepayment meters as a last resort to ensure consumers are able to pay their energy bills.”
For the latest cost of living advice and support this winter, visit The Independent’s regularly updated guide
