Prepayment metering appears on the rise in Britain

Various evidence suggests prepayment metering in Britain is increasing, most likely due to the energy crisis and rising cost of energy bills.

One of these is data on prepayment meter installations presented by the comparison website Uswitch, which was obtained from the regulator Ofgem under a freedom of information request.

Citing data from 2019 onwards, Uswitch has reported that the number of prepayment meters started to show an increase in the second half of 2021, following a steady decline from mid-2019.

In Q2 of 2019, there were a total of almost 7.84 million prepayment meters (approximately 56% electricity, 44% gas).

Have you read?
Data shows monthly GB smart meter rollout up 11%
REPowerEU is the Green Deal on steroids

By Q3 of 2021 the number had declined to 7.32 million (with similar electricity, gas ratios) but by Q1 of 2022, there was an increase to 7.38 million – and if continuing at the same rate, corresponding to almost 10,000 per month, would be approaching 7.47 million by year end.

However, the prepayment picture is more complex than these figures alone suggest. For example, they do not indicate whether the conversion is at the behest of suppliers, which are able to convert households that fall behind in their energy bill payments, or at the request of consumers themselves, as some may do to aid their budgeting.

Smart metering

More significantly they present one facet of the market and don’t take account of smart metered households that are using their meters in prepayment mode. According to the statistics from the Department of Business, Energy and Industrial Strategy, at the end of 2019 approximately 19% of installed smart meters, almost 2.9 million, were operating in prepayment mode.

By the end of 2021 the number had increased to almost 3.4 million – a 13% proportion, broadly in line with the 14% levels of prepayment meters in the market – suggesting that much of the decline in prepayment metering was replaced with smart meters operating in prepayment mode.

Nevertheless, the figures taken together point to an overall increase in prepayment metering, albeit marginal, from around 10.67 million at the end of 2019 to 10.74 million by the end of 2021 (BEIS appears to report the smart meter prepayment figure annually, with the next due in Q1 of 2023).

While not to underestimate the significance of an uptick in prepayment metering and one may argue about the figures, which clearly warrant more detailed analysis, they nevertheless indicate that approximately one in five residential energy customers are using prepayment for their electricity and gas in Britain currently.

With energy prices reaching record highs this should be an alert for suppliers to monitor for vulnerable households.

In particular the smart meter data offers several opportunities for identifying and supporting customers at risk, for example through analysis of consumption and enabling the sending of notifications and alerts.

In a statement Richard Neudegg, director of regulation at Uswitch.com, commenting on a rise of prepayment meter numbers, referred to it as a warning of things to come.

“We will most likely see more and more households moved to prepayment meters in the coming months and years,” he advised, saying: “Families and individuals on prepayment meters will be plunged into darkness as they self-disconnect when they can’t afford to top up.”