Prepayment and water meters: Are they worth it?

water meters

water metersEnergy bills can be one of the biggest drains on our family income, and sometimes paying by meter can help us budget or cut cost. But sometimes meters can be more expensive. Find out when gas, electricity and water meters are a good idea – and when to avoid them!

Gas and electricity meters

We generally have two options of how to pay for our gas and electricity: a ‘prepaid’ meter or a ‘credit’ meter.

Prepayment for your electricity and gas works by paying upfront via a top-up smartcard, token or key. You load the money on via The Post Office, Payzone or Paypoint shops, or sometimes money is placed straight into the meter itself.

Some prepayment meters are installed in homes that may have had energy supplier debt at some point; they may also be installed in rented properties by the landlord.

The pros are that they help to prevent unexpected bills and allow you to budget your money.

The cons of having a meter are that they can be inconvenient, and you pay above the average costs of gas and electricity compared to online deals. According to Consumer Focus, on average a customer paying by prepayment meters will pay almost £80 more per year for their energy than a customer paying by direct debit for their gas and electricity.

Another disadvantage is that an older meter may need to be manually updated with the latest energy prices. If this process is delayed, it can leave you owing money or paying too much.

Remember, if you move into a house with a prepayment meter, always register with the energy company as the new account holder and then compare prices to make sure you’re on the best prepaid tariff.

For more information on Prepayment meters, and how to avoid getting left in the dark check out this article from The Debt Advisory Service.

Switching your prepayment tariff

It is possible to switch prepayment meter tariffs to one of the big six energy firms or with some smaller energy suppliers. Bear in mind that the tariff prices will vary regionally in the same way as direct-debit tariffs vary. The easiest way to switch is by checking an accredited comparison site to find the cheapest plan for you.

Changing to a credit meter

A ‘standard’ or ‘credit’ meter measures your usage and then you receive a bill or pay via direct debit.

If you feel that the negatives of a prepayment meter outweigh the positive, then switching to a credit meter could be possible. However, always consider your financial situation in the long term, as a credit meter could mean you are more susceptible to slip into debt.

Things to consider before switching:

  • A credit check may be needed. Ofgem rules state if you have more than £200 worth of debt with a supplier you can be stopped from switching.  Some also require you to be out of debt for at least three months.
  • It could cost around £60 to switch. However, it’s always worth asking your supplier as some do let you switch for free.
  • You may have to pay for the meter if you change supplier before 12 months, so its costs can be recouped.

Water meters

There are two ways to pay for the water you use in your home – you either have a water meter, and are charged based on the amount of water you use, or you pay a standard fee.

Without a water meter the amount you pay is calculated depending on the ‘rateable value’ of your home. The price is fixed so the more your home can be rented for, the more you pay.

Is a water meter right for me?

As a rough guide, if there are more bedrooms than people in your house, then it’s probably a good idea to be using a water meter.

The main things to consider are the prices of the water company you’re with and your usage.  For an accurate calculation, talk to your water company. Or alternatively check out the uSwitch calculator or the Consumer Council for Water’s calculator.

The types of questions you’ll be asked include your washing machine and dishwasher usage and how many baths and showers are taken weekly. This allows them to get an overview of your water consumption.

To give you an idea, a single person in a four-bed house could save up to £200 a year with a water meter, but others can be left seriously out of pocket, so it is well worth checking before you switch.

Most homes can have a meter installed free of charge, but if it is impractical or unreasonably expensive to carry out the installation you may have to pay. If you switch to a water meter you have the option of switching back to an unmetered charge within the first 12 months if you change your mind.

Things to consider before switching:

  • From 1 April 2012 water companies can increase bills in England and Wales. It’s a move that’s been approved by Ofwat and it could mean a 5.7% increase in your bill, depending on the region you live in.
  • In Scotland it is expensive to have a water meter installed so unless you’re living in a massive property on your own, it may not be worth the cost.
  • With water bills you have a fixed rate and know exactly what you’re paying no matter how many showers you have.
  • It is advisable to check with your water company the rateable value of your property to see if a water meter is right for you.