Energy firms will be blocked from charging customers extra fees if they use pay-as-you-go meters as part of crackdown in Jeremy Hunt’s Budget
- ‘Prepayment Premium’ which had affected four million homes to end from July
- Millions are set to save £45 a year on their energy bills per year, say the Treasury
- Firms were temporarily banned from installing meters, but ban will lift in April
Energy firms will be blocked from charging their customers more if they use prepayment meters in reforms to be announced Jeremy Hunt’s Budget.
The Chancellor will end the so-called ‘prepayment premium’ which has impacted more than four million households with pay-as-you-go meters, from July.
Millions of households will save £45 a year on their energy bills as a result, according to the Treasury. Households using the meters currently pay more on average than direct debit customers because firms managing the meters pass the cost onto users.
The Treasury estimates the change will cost the taxpayer £200 million.
Mr Hunt described the system as ‘clearly unfair’, adding: ‘We are going to put an end to that.
The Chancellor will end the so-called ‘prepayment premium’ which has impacted more than four million households with pay-as-you-go meters, from July
Households using the meters currently pay more on average than direct debit customers because firms managing the meters pass the cost onto users
READ MORE: Single mother reveals EDF debt collector ‘forcibly installed’ a pre-payment meter while she was at work – and she and her son fell ill during 10 freezing days with no heating
‘From July, four million households won’t pay more than those on direct debits. We’ve already cut energy bills by almost half this winter, and this latest reform is proof again that we’re always on the side of families.’
Prepayment meters came under scrutiny earlier this year when it was revealed that energy giant British Gas sent debt collectors to ‘break into homes’ and force-fit pay-as-you-go meters on ‘vulnerable’ customers.
Energy companies can obtain court warrants which give them legal rights to enter people’s homes and fit prepayment meters if customers have not paid their bills. The customers must then top up to continue receiving gas supplies, and if they fail to do so they risk their heating being cut off.
Firms were subsequently temporarily banned from installing meters under warrant, but the order will expire at the end of this month.
Energy Secretary Grant Shapps said: ‘While actions I’ve pushed for have meant forced installations are on pause, warrants aren’t being waved through and Ofgem is toughening up its reviews, our changes will make sure families aren’t penalised simply for how they heat their home.’
Elsewhere in the Budget, the Chancellor is expected to scrap a planned £500 hike in energy bills, which was due to come into force next month,
For the average household, bills could now stay at around £2,500, instead of increasing to £3,000 as was previously announced.
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