Pay As You Go Electricity: Is it Right For You?

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Hundreds of thousands of households all over the country use prepayment meters to pay for their energy tariffs. For those who are frustrated with inaccurate direct debits, and bills that don’t reflect their usage, pay as you go electricity may be an attractive option. As long as you don’t mind topping up your electricity meter manually, it can be a great way to feel more in control of your energy spending.However, pay as you go electricity also comes with its caveats. For some, it may be more expensive and less efficient. At Papernest, we strive to bring you the information you need to make an informed decision. So let’s see if pay as you go electricity is the right option for your household…
Last update: November 2022

As you may have heard on the news, the UK energy market is currently under an immense amount of stress as a result of a global gas shortage driving up costs and putting several energy suppliers out of business. To learn more about this and stay updated on a daily basis you can read our page on the UK energy crisis.

Is pay as you go electricity more expensive?

By and large, pay as you go electricity tariffs are a little more expensive than their counterparts that enable energy consumers to pay by direct debit. After all, direct debits are more advantageous to energy companies. Because they ensure a certain income for each customer, they can improve energy companies’ cash flow and insulate their (usually wafer-thin) profit margins.

That said, it’s all about finding the right energy tariff. The Papernest team may well be able to find you a pay as you go energy tariff that actually offers better value for money than what you’re paying right now.

But for us to help you decide whether pay as you go electricity is right for you, we need to start at the very beginning.

What is pay as you go electricity tariff?

A pay as you go electricity tariff is a tariff that’s designed with the specific needs of prepayment customers in mind. These kinds of prepayment tariffs have their own energy price cap, and there are several suppliers (like Boost Power) that specialise in pay as you go energy tariffs.

How does pay as you go electric work?

When you have a pay as you go electric meter, you are issued a smart card or key that you insert into your meter. This meter can be taken to your local Post Office or your nearest PayZone store to be topped up with credit. You may add a maximum of £50 credit in any one transaction, and your electricity meter will typically hold a maximum amount of £250 in credit.

As well as paying in-store, you will also be able to pay online with your credit or debit card, wither via your customer portal on your supplier’s website, or through their mobile app. Many suppliers will also allow you to top up over the phone.

If you are unable to top up, and you run out of credit, your supplier will allow you to activate emergency credit (usually around £10) to prevent you from being (quite literally) left in the dark.

Why chose a pay as you go electricity tariff?

There are many reasons why you may choose a pay as you go meter and tariff. Many energy consumers feel that it helps them to feel more in control of their energy spend. Those who have previously run up high electricity bills benefit from the fact that energy spending is capped on a pay as you go plan.

Energy consumers who have been stung by electricity tariffs with inaccurate direct debits based on estimated usage may also gravitate towards pay as you go electricity. Although rates are generally a little higher, you know that you’ll only ever pay for the energy you use.

What are the pros and cons of a pay as you go electricity tariff?

Just like any electricity tariff, a pay as you go tariff comes with its own set of pros and cons. At Papernest, we’re committed to helping energy consumers just like you to make the right informed choice for their households.

With that in mind, we hope that you’ll find the table below useful. Here we’ve compiled the inherent pros and cons of a pay as you go electricity tariff:

PAYG Electricity Pros PAYG Electricity Cons
You only ever pay for the electricity you use Unit rates tend to be more expensive
No more inaccurate estimated bills and direct debits. Less choice of available tariffs
Helps you to feel in control of your energy spending How much you top up may fluctuate throughout the year, making your spend less consistent than a direct debit
Lots of ways to top up Not everyone finds it easy or convenient to top up
Emergency credit means that you needn’t be without energy if you’re unable to top up If your emergency credit expires, your energy may be cut off.

Who is a pay as you go suitable for?

Pay as you go is best suited to energy consumers who have previously run up large bills or feel like they have lost control of their energy spending. Although going through the process of topping up your energy meter isn’t for everyone, it can be a great way to feel more in control of your energy spending.

What is the best pay as you go electricity plan?

It’s very difficult to definitively state which is the best pay as you go electricity plan at the moment. There are so many variables at play. Where you live, and how much energy you consume can affect which tariff is the best fit for your needs.

That’s why the Papernest team strives to find and deliver the best pay as you go energy tariffs for your needs, circumstances and location.

However, if we go off UK average energy rates and assume median average consumption of 2,900 kWh of electricity and 12,000 kWh of gas per year, one the best pay as you go electricity plans at the moment is Omni Energy’s Omni Prepayment Variable. This comes to an estimated £984 per year, falling below the current Ofgem Energy Price Cap of £1,042 per year (expected to rise to £1,140 in April 2020). This is rare for a prepayment tariff.

How to switch to / from a pay as you go electricity meter?

If you decide that you want to switch to a pay as you go meter, most suppliers will be able to do this free of charge. Indeed, many energy suppliers move customers to prepayment meters if they are having trouble paying their bills. The best way to switch to a pay as you get in touch with your energy supplier and see if they would be able to replace your existing credit meter with a prepayment meter. Most suppliers will be able to facilitate this for you, although some smaller suppliers may not support prepayment meters.

If your supplier is able to offer you a prepayment meter, it is likely to be under the following conditions:

  • You have access to your meter 24 hours a day.
  • Your meter is not above head height
  • There are no issues that would prevent you from topping up when needed

Does it cost to change from a pay as you go meter?

Changing from a prepayment meter to a credit meter is a little more complicated. According to Citizens Advice, most energy suppliers (including the “Big 6”) will be able to replace your prepayment meter with a conventional credit meter (or a smart meter) without charge.

The only caveat is that they will likely run a credit check to ensure that you do not have any outstanding energy debts. If you’d prefer that they not carry out a credit check, they may forego this if you can pay a deposit to cover your future energy usage.

Your supplier will base the amount of your deposit on the energy consumption of households similar to yours over the space of 3 months. Typically this will be between £150 and £300.

I’ve just moved to a house with a pay as you go meter – what should I do?

If you’ve moved to a home with a pay as you go electricity meter, the first thing you should do is find out who supplies energy to the property, and let them know that you have moved in. We’d advise against using the previous occupant’s smart card or key before you speak to your supplier. This is because the previous occupant may have racked up a debt with the supplier for which you absolutely don’t want to be liable.

Your supplier will be able to explain how to top up your energy meter and send you a new card or key of your own. In the meantime, you will be able to top up your meter online, in-app, or over the phone. As soon as your new card arrives, insert it into the meter to activate it. Once you’ve done this, you can top it up at any Payzone location or Post Office whenever you like.

How to top up your pay as you go plan?

Managing your energy account is easy when you have a pay as you go energy plan. You just need to keep topping up your energy as and when you need it. Of course, this means that you’ll need to learn how to top up your meter.

How do you top up a prepayment meter?

There are 3 days to top up your prepayment meter:

  • Top up in-person by taking your key to your Post Office or any PayZone location
  • Top up over the phone (your supplier will likely have a 24-hour automated line for this)
  • Top up online via your supplier’s website or mobile app

What about Smart pay as you go meters?

You’ve almost certainly heard about the smart meter rollout. The government and energy suppliers are working together to make smart meters available to all domestic and commercial energy consumers by 2025.

But did you know that you can also get a smart pay as you go meter?

These come with an In-Home Display Unit (IHDU) that allows you to better track your energy consumption, showing you what you spend as you spend it. If you’re taking steps to reduce your energy consumption, this will allow you to track the effects of your energy-saving measures in real-time.

Your supplier may be able to replace your pay as you go electricity meter with a smart prepayment meter. You will not be charged for this, but it can help you assert even more control over your energy spend.

pay as you go electricity

What if you lose your prepayment meter key or smart card?

If you lose your smart card or key, alert your energy supplier as soon as possible. They will be able to send you a new one. While you’re waiting, you will still be able to top up your account online and over the phone.

Let the Papernest team find the perfect pay as you go electricity tariff for you!

Although a pay as you go electricity tariff can be more expensive, that doesn’t necessarily mean that you can’t save money with a prepayment meter. It’s simply a case of finding the right tariff for you!

The Papernest team can search through dozens of pay as you go tariffs from a huge range of suppliers (including prepayment specialists). Call us today on 0330 818 6225 to see how much you could save.

We’re available from 8am to 6pm.

Would you like to know more about your energy tariffs? Great! Check out these related articles

  1. Fixed or variable energy tariff
  2. Variable energy tariff
  3. Dual-fuel
  4. Economy 7

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What is a pay-as-you-go energy tariff?

A pay as you go energy tariff allows you to pay for your energy in advance. So you only ever pay for the energy you use. On the other hand, if you pay by direct debit, you may find that you’re charged more than you should be because your direct debits are based on estimated usage rather than your actual usage.

Is a pay as you electricity plan cheaper?

This really depends on your circumstances and your tariff. Energy rates tend to be a little higher on average on a pay as you go plan. However, you can trust the Papernest team to find you the perfect pay as you go energy plan. One that saves you money while also asserting more control over your energy spend.

Can my supplier force me to use a prepayment meter?

If you’ve fallen into debt with your energy supplier, they may suggest moving you to a prepayment meter. However, they cannot force you to get one fitted unless they have first attempted to set up a repayment plan or increasing your monthly direct debit.

Can I change a prepayment meter?

You may be able to change your prepayment meter if you don’t feel that it’s giving you good value for money. Most energy suppliers will do this for you free of charge. However, they will likely cary out a credit check before doing this, to ensure that you have no outstanding energy debts.

Updated on 11 Nov, 2022

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