Ofgem, which has called energy prepayment the option of 'last resort', has announced a price cap for customers until the roll-out of smart meters in 2020.
But smart metering is already being widely used in the district heating sector, where it is revolutionising prepayment and reducing energy bills.
Customer friendly smart meters are fast making prepayment the first choice option for thousands of residents connected to community heating schemes. Technology from metering and billing specialist Switch2 Energy is helping customers to reduce energy consumption and bills and is pointing the way forward for the 'big six' energy suppliers and others to follow.
Switch2 is working with Sheffield City Council to roll out smart meters to 6,000 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 pay-as-you-go to provide better budgeting control and because there is no price differential between the two payment types.
The G6 smart pay-as-you-go meter was introduced by Switch2 in 2012, replacing the traditional corner shop/token based prepayment system with an instant top-up credit facility via smartphone, tablet, computer, phone, Post Office or PayPoint outlet.
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 earlier this year. It has taken smart metering and energy prepayment to a more advanced level, providing everything residents need to programme, control and monitor their energy usage, while also taking care of budgeting and payments.
Kirsty Lambert, Director of Switch2, said: 'The big six energy suppliers have a lot to learn from the community heating sector, where advanced smart metering is already available and is demonstrating the positive face of energy prepayment. When implemented well, prepayment can become the most popular, flexible choice and help customers budget better and save money.
'It can be particularly beneficial for vulnerable customers; for example our technology provides an emergency credit facility and other features to help residents who run into financial difficulties. By putting residents in charge of their heating system and costs, as we are doing, the results are often amazing.'
More than 25,000 homes are using Switch2's prepayment technology, including residents of housing providers such as Hyde Housing, Gentoo, Notting Hill Housing and Kirklees Neighbourhood Housing.
Switch2 remotely manages and monitors customers' smart meters from its UK customer service centre, which provides complete billing, prepayment and administration services to more than 69,000 homes across 430 community energy and district heating schemes.
Switch2's Incontro smart meter can also monitor six other utilities, including water, and handle billing of electricity. It operates via any mobile network, avoiding the need for complex and costly infrastructure. Diagnostics and system upgrades are made remotely to the system 'over the air', thereby reducing installation, servicing and maintenance costs.
Further information: www.switch2.co.uk