A Fair Tariff for Every Household
Prepayment customers are often among the most financially vulnerable households in the country. They should not pay more for electricity simply because they pay in advance.
Under this policy, every domestic customer would receive the same national electricity tariff regardless of how they choose to pay.
This means prepayment customers would receive:
- the same standard electricity unit price;
- the same 7.5p per kWh overnight rate where they have a smart meter;
- the same Electricity Network Connection Charge;
- the same consumer protections.
Prepayment would simply be a payment method, not a separate tariff.
Replacing the Standing Charge
The current standing charge would be replaced by a transparent Electricity Network Connection Charge.
For a standard domestic property this would initially be approximately:
- £25 per month
- 83 pence per day
Rather than hiding network costs within electricity prices, every household would make a clear contribution towards maintaining the local electricity network.
For customers paying by Direct Debit, this would simply form part of the monthly bill.
For prepayment customers, the process would remain equally straightforward.
A Simple Daily System
The network charge would accrue at 83p each day.
If there is sufficient credit on the meter, that daily charge would simply reduce the available balance.
If the meter has no credit, the charge would continue to accrue as a small outstanding balance.
Nothing more happens.
The customer is not disconnected because of the network charge alone, nor are they expected to purchase large amounts of electricity simply to cover the monthly subscription.
Instead, the outstanding balance is recovered automatically the next time the customer tops up.
For example:
| Day | Daily network charge | Outstanding balance |
| Day 1 | £0.83 | £0.83 |
| Day 2 | £0.83 | £1.66 |
| Day 3 | £0.83 | £2.49 |
| Day 4 | £0.83 | £3.32 |
| Day 5 | £0.83 | £4.15 |
If the customer adds £20 of credit on Day 5, the meter would first recover the outstanding £4.15.
The remaining £15.85 would become the customer’s available electricity balance.
From that point onwards the customer simply uses electricity as normal.
Each time electricity is consumed, the balance reduces according to the applicable unit rate.
Each day, the next 83p network charge is also applied.
There is no requirement to buy a fixed number of units of electricity or maintain a minimum balance.
The customer simply tops up as required, exactly as they do today.
Lower Electricity Prices Mean Credit Lasts Longer
One of the biggest advantages of the proposed tariff is that electricity becomes significantly cheaper.
Once any outstanding network charge has been recovered, every remaining pound on the meter purchases electricity at the national tariff.
This means customers’ credit lasts considerably longer than under today’s prices.
Instead of paying around 28p per kWh for electricity, households would pay:
- 15p per kWh during the standard period
- 7.5p per kWh overnight
For the same electricity consumption, customers would therefore need to top up less frequently than they do today.
Cheaper Overnight Electricity
Many prepayment customers live in homes without access to mains gas.
This is particularly common in:
- apartments;
- flats;
- older social housing;
- rural properties;
- homes heated using storage heaters or other electric heating systems.
These households often face some of the highest heating bills because they rely entirely on electricity.
Under the proposed tariff, every prepayment customer with a smart meter would automatically receive the 7.5p per kWh overnight electricity rate.
There would be no need to apply for a separate Economy 7, Economy 10 or specialist tariff.
This significantly reduces the cost of operating appliances that can be programmed to run overnight, including:
- storage heaters;
- heat pumps;
- electric hot water cylinders;
- electric radiators with thermal storage;
- electric vehicle charging;
- washing machines;
- tumble dryers;
- dishwashers.
For households living in all-electric properties, particularly flats and apartments, this represents one of the biggest benefits of the policy.
Instead of paying some of the highest electricity prices in the country simply because they cannot access gas, these households would have access to one of the lowest overnight electricity prices available.
The policy therefore helps those households that often have the fewest heating choices while encouraging electricity demand to move into the overnight period when spare generation capacity is available.
Temporary Arrears Are Allowed
Life is unpredictable.
Customers may occasionally be unable to top up their meter because of temporary financial difficulties.
Rather than immediately beginning debt recovery, the policy allows the Electricity Network Connection Charge to build up for up to three months.
At approximately 83p per day this would be around:
| Time without payment | Outstanding balance |
| 7 days | £5.81 |
| 14 days | £11.62 |
| 30 days | £24.90 |
| 60 days | £49.80 |
| 90 days | £74.70 |
Whenever the customer tops up, any outstanding network charge is recovered before the remaining balance becomes available for electricity.
This provides flexibility during short periods of financial hardship without requiring suppliers to write off legitimate network costs.
Formal Debt Recovery
If outstanding network charges exceed three months, the supplier would begin a formal repayment arrangement.
The objective would not be to disconnect the household.
Instead, suppliers would agree an affordable repayment plan while ensuring sufficient credit remains available for electricity.
Where appropriate, suppliers could recover part of each future top-up until the arrears had been cleared.
Once the account returned to normal, only the standard daily network charge would continue to accrue.
Supporting Households in Genuine Hardship
The energy supply system should not be expected to solve poverty.
Energy suppliers exist to supply electricity, maintain billing systems and recover legitimate costs.
Determining who requires financial support is the responsibility of Government.
Where a household is experiencing genuine hardship, local authorities should be able to issue targeted energy vouchers.
These vouchers could be credited directly onto a prepayment meter to:
- purchase electricity;
- reduce or clear outstanding network charges;
- prevent vulnerable households from losing power during a financial emergency.
This approach keeps social support within the welfare system rather than requiring energy suppliers to subsidise bills through higher prices for everyone else.
Preventing Abuse
Some may argue that higher-income households could switch to prepayment simply to avoid paying higher network subscriptions.
This policy prevents that.
Payment method would not determine the tariff.
Instead, subscription tiers would continue to be based on actual electricity consumption and the characteristics of the property’s electricity connection.
A household consuming unusually large amounts of electricity could therefore still move into a higher subscription tier regardless of whether it pays by Direct Debit or prepayment.
Smart meter data would ensure every customer is treated consistently.
Clear Information
Customers should always understand where their money has gone.
Every meter, receipt and supplier app should clearly display:
- current electricity balance;
- daily network charge;
- any outstanding network charge;
- any repayment amount;
- recent top-ups;
- current electricity prices.
Nothing should ever be hidden.
Transparency builds trust and allows customers to manage their household budget more effectively.
Why This Is Better
Today’s prepayment customers often pay higher prices while also facing the greatest financial pressures.
This proposal creates a simpler and fairer system.
Every customer contributes towards maintaining the electricity network.
Every customer receives the same national electricity tariff.
Customers with smart meters automatically benefit from cheap overnight electricity.
Temporary hardship is accommodated without immediate debt action.
Long-term hardship is addressed through targeted Government support rather than hidden subsidies within electricity prices.
Most importantly, prepayment customers gain access to significantly cheaper electricity, helping every pound they top up go further than it does today.
The result is a system that is simpler, fairer and far more transparent than the complex collection of tariffs and standing charges that exists today.