Pre-paying for your electricity is unlikely to save you money

We’re seeing a lot of advertising recently from suppliers of pre-pay, or pay-as-you-go electricity supply services. One of the advertising slogans used is “no more shocking bills” which to me seems to give the impression that might be saving money by switching.

To be fair to the companies involved, most of the advertising pitch is based around “control” – “Always in control – With Pinergy you are the boss”, and “Sign up to PrePayPower now and enjoy having total control over your electricity costs!”

Control costs, or control usage

Technically – none of us have, nor can our specific electricity provider provide us with, control over the costs we pay for electricity. We can choose our electricity provider to avail of the costs they charge for electricity, but once signed-up, we can’t control what they charge us.

However, when it comes to control of our electricity usage don’t we all have control over that already, no matter who our electricity provider is? We have that control whether we’re with Electric Ireland, Airtricity, Bord Gais Energy – never mind Pinergy or PrePayPower.

Just because we have to regularly load up a meter in our hallway, or pay a regular direct debit, the principles of how we use – or don’t use – electricity will always be the same. And how we control our usage of it as well.

Pre-pay Electricity is Expensive Electricity

Leaving aside the bogus “control” factor therefore, moving to a pre-pay electricity service provider, like for like with the regular providers, will cost you more. So, you’re paying extra to get “control” that you already have. Pointless!

Specifically, you pay 37.5c per day for the pre-pay meter that will be installed in your house. That’s an extra €136.87 per year added to cost of electricity. That you have no control over if you sign up to them.

That charge is on top of the electricity standing charge (€125 to €169 per year) that you pay no matter which electricity service provider you use, and on top of the Public Service Obligation Levy as well (€31.60 per year).

At the moment, you can have your pre-pay meter installed for free, but who’s to say that that won’t cost you either. And presumably, you’ll get stuff for any maintenance costs on the meters as well.

No savings on cost

And just to clarify, the pre-pay electricity service providers do not provide electricity at a cheaper rate than the standard ESB rating. Pinergy “guarantee to match the standard electricity tariffs of Electric Ireland”, while PrePayPower promise that “Our rates match Electric Ireland Standard Electricity Price Plan’s unit charge and standing charge”.

Both company websites are, in fact, so similar, I did have to a special to check that they were actually different companies.

You can’t shop around

And despite their similarities, because of the fact that you need a company specific meter installed, switching electricity suppliers to try to get a better deal becomes a lot more complicated.

Worth switching?

While I appreciate that certain consumers are living from day to day when it comes to their income and expenses, based on the information above, switching to a pre-pay electricity supplier doesn’t seem to be an answer. Yes, you can see your money being spent and used on a daily or weekly basis as opposed to monthly or bi-monthly, but given the way you’re charged, it seems to be a false economy.

  1. You pay more
  2. You don’t get any more control over your electricity usage
  3. It’s harder to switch electricity suppliers to get a better deal

What to do?

Firstly, as a simple change, if your regular bills are just too big, you could set up a weekly or monthly standing order to pay a fixed amount for your electricity instead of paying by direct debit. That’ll smooth out over a year – overpaying in the summer while underpaying during the winter.

Before taking the drastic move to a pre-pay electricity supplier, try to cut your own electricity bill – work on controlling your usage and see about switching to a cheaper supplier.

In these tougher economic times, I don’t see how switching to a more expensive service supplier can be the solution to cutting costs.

 

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3 Responses to “Pre-paying for your electricity is unlikely to save you money”

  1. Jim O'Sullivan April 14, 2014 at 08:11 #

    The great danger with this pre-pay is that should you run short of money the meter will disconnect power almost immediately. Under bill-pay a customer who runs into money problems–losses a job for example—the system is sufficiently flexible so that there will be no disconnection for anything up to 4 months from the date that the last bill was defaulted on. This is because under bill-pay customers have the protection of a Code of Practice-Disconnection which they forfeit when they sign-tp with Prepaypower or Pinergy—-many people do not understand the protections that they are giving up and this is placing vulnerable people in great danger.It is remarkable that these opertors have been allowed to place such meters between people and access to electricity as there are many cases documented of people actually dying as a result of abrupt power disconnection when a meter falls out of credit. Well done for highlighting this issue, people need to be better informed, the ads are very misleadsing on the key points.

    • Pat Walsh December 6, 2014 at 08:34 #

      Jim your comment here made me laugh, I am a prepay user, it highlighted my wastage and saved me money, id really love to see even 1 of these”many documented cases of people dying when their meter fell out of credit”my guess is that you must be involved with a post pay provider…

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  1. Pinergy incorrectly advertising their contact number on TV adverts | SayNoTo1890.com - September 12, 2013

    […] As coincidence would have it, a couple of weeks ago on ValueIreland.com, I wrote about Pinergy and the other pre-pay electricity providers popping up here in Ireland, Pre-paying for your electricity is unlikely to save you money. […]

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