Prepayment meter standard tariff poverty premium removed

The prepayment meter standard tariff poverty premium was removed with effect from 1 April 2024, according to research published by the Personal Finance Research Centre at the University of Bristol¹. The report describes "the removal of the prepayment meter standard tariff poverty premium, effective from the 1st April 2024"¹.

The change followed the levelling of standing charges. The report states: "In 2024, standing charges between prepayment meter and Direct Debit were levelised, so that those who pay via prepayment meters did not pay more than those paying by other methods"¹. The premium had stood at £46 for a dual fuel customer in 2022¹.

The removal sits within a wider set of regulatory interventions the report lists, including the Domestic Gas and Electricity (Tariff Cap) Act 2018, now commonly known as the Energy Price Cap, the cap on the total cost of credit introduced in 2015, and the Rent-to-Own Price Cap in 2019¹. It also cites "the introduction of the Consumer Duty by the FCA in 2023" as "an important milestone in the consumer protection landscape"¹. The Financial Conduct Authority is the regulator for these markets.

Energy poverty premiums have not disappeared. The report finds that 59% of low-income households incurred at least one energy-related poverty premium, with a mean energy-related premium of £145 per year for those households¹. It says any increase in the energy poverty premium in 2025-26 compared with 2022-23 is largely due to the reintroduction of fixed rate tariffs from the middle of 2023¹. Among dual fuel customers paying by Direct Debit but on an Energy Price Cap tariff, the premium was £171¹. Those on prepayment meters paid on average £129 more than they would have if paying by the best-value Direct Debit tariff¹.

Across all markets, the report estimates that 95% of low-income households incur at least one form of poverty premium, with an average premium of £380 per year among those households¹. A quarter incur £505 or more per year, and one in ten face £736 or more¹.

Why it matters for households

For prepayment meter customers on a standard tariff, the amount charged for standing charges no longer exceeds the equivalent charge for Direct Debit customers, a change in effect since 1 April 2024¹. That removes one specific cost that had applied to this group, which the report put at £46 for a dual fuel customer in 2022¹.

The report's 2026 estimates cover low-income households in Britain and are based on a telephone survey of 1,040 respondents with household income below 70% of median income, adjusted for household size and housing costs, conducted between December 2025 and January 2026, alongside a costing exercise¹. Energy premiums remain the largest single category in its breakdown, at £90 on average across households incurring any premium, with prepayment meter costs contributing £20 of that average¹. The report notes that energy premiums are effectively mutually exclusive, as dual fuel customers generally incur one energy premium or another¹.

Other components include insurance at £129 on average, money and credit at £52, food at £103 and paper billing at £6¹. The report also lists the Premium Finance Market Study and a 2025 market study on General Insurance Pricing Practices among recent publications it considered¹.

What happens next

The report does not set out dated next steps for the prepayment meter change. It notes that the Government's Motor Insurance Taskforce concluded that no action on insurers' pricing models should be taken at this time¹. It also records that Fair4All Finance and partners have been piloting a No Interest Loan Scheme since 2022¹. No further dates for energy standing charge or prepayment meter policy have been reported¹.