What You Need To Know About Prepaid Meters

May. 06, 2024

What You Need To Know About Prepaid Meters

Pre-paid electricity meters have become increasingly commonplace in recent years, not only amongst home owners but also landlords, developers, and property investors looking to manage the risks and costs associated with property rentals and ownership.

What are the advantages of prepaid electricity?

You can monitor your consumption: It’s easier to track consumption on a monthly basis as you need to top up when you run low and you will be doing so more often in certain situations, such as when you’ve spent the weekend baking or the family has been taking long baths rather than quick showers.

You’re in control of how much electricity you use: If you feel you have been spending too much on electricity, you can immediately reduce your usage. Research has shown that energy awareness results in behaviour changes which typically reduces a household’s monthly energy consumption by around 15% - or much more if you so decide.

Manage all resources better: In other words, by being in control of consumption, you are not only able to save electricity and thereby money, it enables you to manage your cash flow and allocate costs properly.

Less admin: You pay in advance so it’s one less bill to deal with at month-end which saves you time and hassle. This is especially advantageous for body corporates and managers of large commercial properties made up of individual units.

No more disputed bills: Because you’re purchasing upfront, there are no more inaccurate council estimates or nasty month-end surprises, especially in winter when heaters are on and we aren’t aware of just how much more electricity we’re using.

Reduced risk for landlords: Municipal accounts are in the property owners name, so it can be a potentially costly headache when tenants fail to pay their utility bills.

Disadvantages of Prepaid meters

1. You cannot negotiate with a prepaid meter. They will automatically disconnect once all the units have been used and this can happen at any time, day or night or even in an emergency.

2. Your energy usage will almost certainly increase during winter months; meaning your top-ups would also have to increase.

3. If you leave home for several days, you must remember to top up so that you don’t return to a defrosted freezer

4. Prepaid meters are more expensive to operate than other types of meters which means you might not be able to access the cheapest tariffs available.

Factors to consider before installing a meter

You will need to choose between a single-phase and three-phase meter before installation and the number of meters you need will depend on how big the property is and whether it’s one home or multiple units, including a flatlet attached to a single dwelling.

It’s also important to make sure you understand the difference between the types of meters available so that you can purchase the right one for your needs.

There are different types of meters, each designed for specific requirements and environments, so it’s important to choose the right meter for your circumstances and, if you are at all unsure, rather consult a qualified electrician for advice.

Integrated Meters

These are the most compact and the cheapest because the keypad is installed directly on the meter. They can be used for commercial and residential property but, with the meters being installed inside the unit there is a level of trust involved as a tenant could try to bypass the meter.

Split Meters

The meter itself is separate from the keypad that is used to type in the prepaid token and it can therefore be locked away in a secure location so that there is no risk of tampering. The tenant only has access to the keypad for convenient recharging.

With these meters, the keypad has to communicate with the meter and there are two main ways of doing this: Split wired meters and Split PLC.

Water meters

We live in a water-stressed country which has experienced severe drought in recent years and, with most of South Africa’s water already having been allocated to users, there is very little surplus water to meet the demands of a growing population.

So, although they aren’t as commonly used yet, water meters are now widely available and are also growing in popularity as they offer the same advantages as prepaid electricity meters.

Decide if prepayment is right for you

Prepayment, sometimes called pay as you go, lets you pay for your energy in small amounts.

If you have a smart meter, your supplier can switch your meter from paying by credit to prepayment remotely. If you have an old-style credit meter, you can swap it for a smart meter in prepayment mode.

If you have a choice about moving to prepayment, think about how it'll affect you.

You could end up with no gas or electricity

You shouldn’t move to prepayment if running out of credit and having no gas or electricity would cause you a serious problem - for example, if you:

are aged 75 or older and live alone

have children under 2 years old living in your home
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are disabled or have a health condition
can't afford to top up and live with children aged between 2 and 5 years old

If you have impaired hearing or sight, you might find it hard to hear an alert or read the meter.

If your supplier is trying to move you to prepayment, they have to follow rules from the energy regulator Ofgem. If you don’t think prepayment is right for you, check how to stop your supplier moving you to prepayment.

You’ll need to top up your credit

If you have a prepayment meter, you'll need to buy credit for your meter from a top-up point - often a local shop or Post Office. Your energy supplier will give you a top-up card or key.

If you find it hard to get to a top-up point - for example, if you’d have to travel a long way - you could get a smart meter with a prepayment setting.

If you have a smart meter in prepayment setting, you can:

top up using your top-up card or key
top up online or through an app on your mobile phone

If you top up online, you should still keep your card or key in case you need to use it - for example, if the app isn't working.

If you have a health condition or disability which makes it difficult for you to reach, work or top up a prepayment meter, you shouldn’t move to prepayment.

If your supplier is trying to move you to prepayment you can check how to stop your supplier moving you to prepayment.

Check what you'll be charged on a prepayment meter

As well as paying for the gas and electricity you use, you pay a daily fee for being connected - known as a standing charge. You pay this with a normal meter too, but when you're on prepayment you need to have credit to pay it - even on days when you don’t use any gas or electricity.

You still have to pay the daily standing charge even if you don't have any credit on your meter. When you next top up, you'll have to pay back all the standing charges that you owe.

The amount of the standing charge depends on where you live and what tariff and supplier you have.

Example

Jacintha’s story

Jacintha has gas central heating, which she switched off last summer.

She didn’t top up her gas meter because she wasn’t using any gas.

The meter still took 28p a day for the standing charge, so she soon ran out of credit.

The standing charges built up until Jacintha decided to add some credit because she wanted to switch her heating back on.

By this time Jacintha owed £17.64 in standing charges. When she topped up by £20 the meter took what she owed and she only had £2.36 left. This meant she had to top up again the next day.

There are 2 main types of tariffs:

standard variable tariff, sometimes called a ‘default tariff’ - your rate goes up and down with the price of energy
fixed tariff - your rate stays the same for the length of your contract

If you’re not sure what gas or electricity tariff you’re on now, contact your supplier or log in to your online account to check.

Check if prepayment is cheaper than paying by direct debit

If you’re on a standard variable tariff (SVT), paying for your energy by prepayment is cheaper than paying by direct debit.

This is because you’ll pay a cheaper rate for each unit of energy you use. You’ll pay the same standing charge on an SVT as you would if you paid for your energy by direct debit.

You’re likely to pay more for your energy in winter

If you’re on prepayment, your supplier can’t spread the cost of energy over the year. You’ll probably pay a lot more in the winter when you need to use more energy to heat your home.

If you have a credit meter or a smart meter in credit mode you can choose a fixed or variable tariff that spreads your direct debit payments over the year. You’ll pay extra in the summer to build up a reserve of money. The reserve is used to lower the payments when you use more energy in winter. Your supplier will work this out so your payments will be the same every month.

Find out about the types of tariff you can choose.

Next steps

If you don't want to move to prepayment but your supplier wants you to, you might be able to keep paying for energy after you use it.

Contact us to discuss your requirements of prepaid energy meter. Our experienced sales team can help you identify the options that best suit your needs.

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