Around 4 million homes could potentially be affected
An expert claims approximately 4million British households could reduce their energy bills by £100 with one straightforward method. Data from Money Saving Expert indicates that between 30 and 35 per cent of UK residents don’t use direct debit for their gas and electricity payments.
Uswitch cites Ofgem statistics showing that, as of 2026, roughly four million people in the UK have a prepayment energy meter, commonly referred to as ‘pay-as-you-go’ energy.
Laura Pomfret, a financial expert who featured on BBC Morning Live today (June 8), explained that settling gas and electricity bills via direct debit can typically save around £100 annually.
Direct debit payments usually involve an energy provider calculating your anticipated annual gas and electricity expenditure, then splitting it into 12 instalments. You then settle that amount throughout the year, though adjustments are sometimes made if the projection is significantly different.
This often results in a surplus in your account during summer months, when consumption is reduced, providing a cushion before higher winter spending. A precise sum is then withdrawn from your account when a meter reading is submitted – either manually or automatically through a smart meter.
“Paying by direct debit can save customers on average £100 per year versus paying as you go, ” Laura said. “That’s obviously not true for everyone, but for the majority of people. And so, one of the biggest benefits of it is, one, it’s, you know, it’s cheaper.
“But, two, you can budget for this. So, your utility bill is one of the biggest bills that you get in your budget. You’ve got your housing costs, uh, maybe council tax, and then you’ve got utilities. And obviously they are increasing every year at the moment. They feel very heavy.
“And so, to be able to forecast that out and know every month that that’s what you need to pay can bring people lots of reassurance. Paying as you go can work well for some households, but but it can create cash flow challenges because if you are enjoying the cheaper bills throughout the summer months.
“Many households pay for their energy via fixed monthly direct debits,” she continued. “So, that’s an a consistent amount every single month that they agree with their supplier. And that’s regardless of energy use. That’s just the same amount.
“Suppliers, what they do is they estimate your annual usage across the utilities that you have with them and then they spread it out, the cost across the 12 months. And it’s designed to help you build up credit throughout the summer months. And then you’ve got more credit in your account for the winter.”
Laura’s remarks follow revelations that a record number of British households are failing to pay their gas and electricity bills by direct debit due to insufficient funds in their accounts.
More than 2.7% of direct debit payments for gas and electricity failed in April because of inadequate funds, according to the latest figures released by the Office for National Statistics (ONS).
The default rate is the highest published by the ONS since records commenced in early 2019 and is three times greater than the 0.9% rate recorded before prices soared as the global economy reopened following the Covid-19 pandemic and Russia invaded Ukraine.
Missed payments on loans, which struggling families often use to cover household expenses, have also risen to their highest level since records began. The UK’s heavy dependence on gas for both electricity generation and domestic heating is believed to be behind the country’s persistently high prices.
An Ofgem spokesperson said: “We know the cost of energy remains a huge challenge for many households and the growing issue of debt is one that requires urgent action from everyone across the sector and government.
“That’s why we’ve introduced tougher rules to make sure energy companies do more to spot the signs when a customer may be struggling and step in quickly to offer support, including offering affordable payment plans or providing emergency credit to reduce the risk of self-disconnection.”
