£100 warning for 5 million households who could pay more for energy despite bill drop

Despite a drop in energy prices, millions of customers will still be charged more than other billpayers. Average gas and electricity bills are set to decrease by £122 a year from when Ofgem introduced its new price cap on Monday, July 1.

However, the cap is not uniform, with households paying different unit rates and standing charges based on their payment methods and location. This means that millions of households will still end up paying £100 more per year than those who pay by direct debit or through a prepayment meter.

Out of the 28 million households on the standard variable tariff (SVT), approximately 18 million pay by direct debit. An additional four million pay for their energy through a prepayment meter, which now has the lowest price cap.

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However, according to figures obtained by Ofgem for The Sun, five million households that pay their energy bill via credit, debit card, or cheque will continue to pay up to £100 more for their gas and electricity. The regulator's latest figures also suggest that those who pay for their energy by standing order face paying more.

Ben Gallizzi, an energy expert at Uswitch.com, said: "The way you choose to pay your energy bill can often impact the rates you're offered. Customers paying by monthly direct debit will usually be offered lower rates when compared with someone who pays on receipt of their bill. This is down to how easy it is for a supplier to manage your account."

"A monthly direct debit allows bills to be paid automatically on set dates and is therefore simpler for a provider to manage."