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Charity Warns Energy Price Cap Hike Will Hit Prepay Customers Hardest

August 23, 2024

Millions of households across the UK will be left in the cold and dark this winter, with energy prices set to rise by more than £150 a year, a fuel poverty charity has warned.

According to Fuel Bank Foundation, households using prepayment meters – who are forced to pay upfront for their gas and electricity – will be hardest hit.

Energy regulator Ofgem announced the new energy cap, which sets the maximum rate per unit that customers can be charged for energy, on Friday, 23 August.

The cap, which comes into force in October, will rise from £1,568 to £1,717 for the average dual fuel household paying by direct debit. Households prepaying for energy via a meter will pay £1,669 a year, up from £1,522.

Fuel Bank Foundation, which provides crisis support to people who can’t afford to top up their prepayment meter, said millions of households will struggle to heat and power their homes.

Winter is already a challenging time for low-income and vulnerable households, but it is especially tough for those forced to prepay for their energy. While all households will be hit with the double whammy of the coming price hike and the need to use additional energy in the colder months, those prepaying for their gas and electricity will find it impossible to absorb the shock. They are unable to spread the costs across the year, as direct debit customers do.

Matthew Cole, head of Fuel Bank Foundation

Last winter, Fuel Bank Foundation provided crisis support to a record 331,042 people in the UK. At its peak, the charity helped 21,000 in a single week and was spending nearly £1 million a week on fuel vouchers to help keep homes warm.

For households with a prepayment meter, the cost of keeping warm over the winter months will be £829, compared to £572 for the average direct debit customer – a difference of £257. Unlike direct debit customers, who pay the same amount each month, people who prepay have a stark choice: find the money as they use the heating or turn it off. Many people simply won’t be able to afford to stay warm or prepare a hot meal.

Matthew Cole, head of Fuel Bank Foundation

“We saw a 34 per cent increase in the number of people we helped last winter, compared to the previous year,” said Matthew. “This is clear evidence the fuel poverty crisis is getting worse, not better. People are dying from living in cold, damp homes. We need decisive action from the new government to address what is now a national shame.”

Fuel prices are almost double what they were before the energy crisis, and likely to stay high for the foreseeable future. Long-term, we need to ensure the UK’s housing stock meets modern day energy efficiency standards, and where upgrades are required, the poorest performing homes are prioritised. However, this is by no means a quick fix, and until then more financial support should be provided by government to help those still suffering as a result of the energy crisis.

Matthew Cole, head of Fuel Bank Foundation