How District Heating Industry Is Making Energy Prepayment Popular

Traditional energy suppliers have a lot to learn from the district heating sector about popularising prepayment by putting it on an equal footing with other types of tariff, says Switch2 Energy.

Energy regulator Ofgem has announced that prepayment tariffs charged by the Big Six and other suppliers will be capped from April 2017 until the roll-out of smart meters in 2020. This is a response to the Competition and Market Authority’s investigation of the energy market, which found “high levels of detriment” by prepayment customers.

By contrast, smart metering is already revolutionising prepayment in the district heating sector, putting residents in charge of their heating consumption and costs to save money on their energy bills.

This is ensuring that prepayment customers get the same fair and transparent deal as credit customers, unlike the wider energy sector, where Ofgem has stated that “prepayment customers are denied the best deals and are more likely to be in vulnerable circumstances”.

Sheffield City Council is rolling out Switch2’s smart energy prepayment meters to 5,800 homes connected to its heat network. This is predicted to reduce customers’ total annual bill by £1.4 million, with the first 227 homes using the pay-as-you-go meters saving an average £238 each over the first year. The technology can be used for either prepayment or credit billing, but more than 80% of residents opted for prepayment to provide better budgeting control and because there is no price differential between the two payment types.

Kirsty Lambert, Director of Switch2, said: “The heat network industry is pointing the way forward for the big six energy suppliers. Advanced smart metering has been available in our sector for a number of years. When implemented properly, prepayment tends to become the most popular, flexible choice. Customers can monitor and control their energy consumption, budget better and save money.”

The G6 smart pay-as-you-go unit was introduced by Switch2 in 2012, using wireless technology to replace the traditional corner shop/token based prepayment system with an instant top-up credit facility via the internet, smartphone app, phone, or any PayPoint location. The technology includes a graphical in-home display to show residents how much energy they are using – helping them to monitor and reduce consumption and save money.

It introduced a convenient and fair charging energy monitoring mechanism for both prepayment and credit billing consumers, with the ability to flex between the two.

Switch2’s next generation Incontro pay-as-you-go technology was launched in 2016. It has taken smart metering and energy prepayment to a more advanced level, providing residents with the facility to programme, control and monitor their energy usage, while also taking care of budgeting and payments.

Switch2 has more than 35 years experience of smart metering and billing for the community energy and district heating sector. The company remotely manages and monitors its smart meters from its UK customer service centre, which offers complete billing and administration services.