Prepayment meters could cost UK households third of income in winter
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Resolution Foundation says higher prices and cold weather will hit poorer households hardest. Millions of vulnerable UK households on prepayment meters could see their energy bills consume almost a third of their incomes this winter. As temperatures drop across the country, the Resolution Foundation said a combination of higher gas and electricity prices and the typical seasonal increase in energy usage over the colder months would hit poorer families most.
The thinktank estimated that the 4m households with a prepayment meter would need to spend more than 30% of their income, after housing costs, on energy over December, January and February. As prepayment gas and electricity meters are typically concentrated among low-income households, it said this drain on family finances would be “unsustainable, leading to a risk of families sitting in cold, dark homes”.
Households have come under renewed pressure from rising energy bills in recent months as events in Russia and the Middle East had led to fluctuations in energy prices on the wholesale market. The energy regulator, Ofgem, said last month its price cap would increase by 1.2% from January in England, Scotland and Wales. For an average household paying by direct debit for dual fuel, this equates to an increase to £1,738 a year.
The cap, which limits the unit price of gas and electricity, will rise by 1% or £21 for the average household with a prepayment meter, to £1,690. While the cap has been lowered this year after the surge in international markets that followed Russia’s full-scale invasion of Ukraine in 2022, it remains significantly higher than three years ago. Typical bills were just under £1,300 in late 2021.
