Energy Price Guarantee coverage narrowed to prepayment meter customers

Households in Great Britain that do not pay for their energy by prepayment meter (PPM) have not been covered by the Energy Price Guarantee (EPG) since July 2023, according to Consumer Scotland¹. Households that do pay by PPM remain covered, which the briefing says is specifically to align costs for comparable PPM and Direct Debit customers and to ensure PPM users no longer pay a significant premium for their energy¹.

The Energy Price Guarantee was introduced alongside the Energy Bill Support Scheme, which provided a £400 bill discount. Consumer Scotland says the two measures combined lowered the average annual bill to £2,100 for a typical household¹. Ofgem's price cap had reached £3,500 for a typical household at the point of that intervention, and has since fallen to £1,923¹.

For PPM customers still covered, the support is delivered as a discount to standing charges, saving a typical PPM customer around £40 per year compared with the position without the EPG¹. Consumer Scotland notes that the EPG is applied automatically to bills, with no application required and no ambiguity about whether a customer receives it¹.

The briefing sets out how many households are affected in Scotland. Ofgem data cited in it indicates that almost 500,000 households in Scotland pay for their electricity with a PPM, and over 300,000 pay for their gas with a PPM, with most gas PPM customers also on a PPM for electricity¹. Consumer Scotland's tracker survey of 1,500 Scottish households, carried out in October, found that half of PPM customers in Scotland said they were struggling with their bills, compared with 30% of the population generally, and 63% said they could not heat their home to a comfortable level, compared with 41% generally¹.

The same briefing reports that gas and electricity prices in October 2023 were 60% and 40% higher respectively than in October 2021, according to ONS figures¹. In its survey, 30% of households said they were finding it difficult to keep up with their energy bills, and 43% said they were finding it more difficult to keep up with bills than a year earlier, with 13% saying it was easier¹. Almost a quarter, 23%, had borrowed money or missed rent payments to afford energy bills in the six months from April to October¹.

Why it matters for households

The change means the level of support a household receives now depends on how it pays. From July 2023, a household paying by Direct Debit, cash or cheque has had no EPG support, while a PPM household has continued to receive a discount worth around £40 a year to a typical customer¹. The standard credit premium paid by households using cash or cheque is separate from this and is not altered by the EPG change.

Consumer Scotland's evidence is that PPM customers are more likely to be under financial strain: half reported struggling with bills and 63% said they could not heat their home comfortably, against 30% and 41% across the population generally¹. The briefing also reports that disabled households, those on the lowest incomes and those without access to mains gas are among the groups most likely to report struggling with energy costs¹.

The wider household costs picture is that bills remain well above 2021 levels even after the fall in the price cap, and the briefing notes that more households are now repaying energy debt on top of ongoing consumption¹.

What happens next

Consumer Scotland published the briefing on 16 November 2023, ahead of the Autumn Statement on 22 November, and set out options it said the Chancellor could consider for support over winter¹. It said the window to use the Warm Home Discount for this purpose had likely passed, because payments were already being processed, and that extending the PPM-EPG was a mechanism available¹. It also said any support would have to be channelled through existing mechanisms because there was insufficient time to implement new policies with new eligibility criteria¹. No decision by the government on extending the PPM-EPG is reported in the briefing¹.