Suppliers can require commercial prepayment meters where a business has prior debt, a poor credit profile, or is on a deemed contract following a change of tenancy. Prepayment rates are typically higher than credit meter rates. Microbusiness customers have a right to request a switch to a credit meter once eligibility criteria are met, and suppliers must not unreasonably refuse.
Last reviewed: 12 May 2026
When Suppliers Can Require a Prepayment Meter for a Business
A prepayment meter (PPM) for business premises works on the same principle as a domestic key or card meter: the occupier pays in advance for energy credit and the supply cuts off when the credit is exhausted. For commercial customers, suppliers can require or install a prepayment meter in three principal circumstances.
Prior debt on the account: Where a business has accumulated unpaid charges and the supplier holds a debt that the business has not agreed to repay under a formal payment plan, Ofgem's Standard Licence Conditions permit the supplier to require a prepayment meter as a condition of continuing supply. This applies both to debt built up under the existing account and to debt inherited when taking over premises on a deemed contract.
Poor or absent credit history: New businesses without a credit track record, businesses with County Court Judgements (CCJs), or sole traders with adverse personal credit history can be placed on a prepayment basis as a condition of supply. The credit assessment is carried out by the supplier at the point of application or contract renewal and is not subject to a regulated scoring methodology for non-domestic customers.
Deemed contract conversion: When a business takes over premises and enters a deemed contract without arranging a formal credit account, the supplier may convert the supply to prepayment as a risk-management measure while the creditworthiness of the new occupant is assessed. This is particularly common where the previous occupant left outstanding debt on the meter point.
Higher Rates on Prepayment: What the Premium Looks Like
Business prepayment meters carry a cost premium over equivalent credit meter contracts. Ofgem does not cap non-domestic prepayment rates in the way that the domestic price cap limits residential PPM charges. Suppliers set commercial prepayment unit rates and standing charges at their discretion, subject only to the general requirement under their supply licence to publish tariff terms and to charge fairly.
In practice, unit rates on commercial prepayment meters run approximately 10 to 25 per cent above the rates available on a standard fixed-price credit contract for the same consumption band. Standing charges can also be higher, reflecting the administrative cost of maintaining a prepayment infrastructure and the higher credit risk the supplier is absorbing.
The standing charge continues to accrue on a prepayment meter even when no energy credit is loaded. A business that leaves premises unused for a period without topping up the meter will return to find the meter in debt by the accumulated standing charge, which must be cleared before supply resumes.
For consumption benchmarking purposes, DESNZ quarterly non-domestic energy price statistics provide average unit rates by consumption band for credit meter customers. Comparing these against the rates on a prepayment contract provides a baseline for quantifying the premium being paid.
Technical Limits: Where Prepayment Meters Cannot Be Installed
Not all commercial premises are technically suitable for a prepayment meter. The supply infrastructure must be capable of accepting the relevant meter type, and the meter point must be physically accessible for the top-up mechanism to work reliably. Specific limitations include:
Half-hourly settled sites: Sites with a Maximum Import Capacity above 100kW, which are required to have half-hourly meters under Elexon's settlement rules, cannot be placed on a prepayment arrangement. The data collection and settlement infrastructure for HH sites is incompatible with standard commercial PPM technology.
Three-phase supplies at high capacity: Large commercial premises receiving three-phase electricity at high current ratings may not have compatible prepayment meter hardware available in the supplier's metering fleet. In these cases, the supplier must use a credit meter and manage risk through other means such as deposits or frequent billing cycles.
Gas supplies above certain pressure tiers: Commercial gas supplies operating above low-pressure distribution are not suitable for standard prepayment metering. Businesses with medium or high-pressure gas connections, typically manufacturing or process sites, receive credit-only supply.
Premises with life-safety systems: Where interruption of supply would create an immediate risk to life or safety, such as care homes, medical facilities, or food production environments with cold chain obligations, suppliers have specific obligations under their licence conditions that limit their ability to install a cut-off mechanism without the appropriate safeguards in place.
The Legal Basis and Ofgem Standard Licence Conditions
The authority for suppliers to install prepayment meters for non-domestic customers derives from their supply licence, issued and regulated by Ofgem. Standard Licence Condition 27 and related conditions address the use of prepayment metering as a means of debt recovery and credit risk management. The conditions require that suppliers act proportionately and do not use prepayment metering as a punitive measure where the debt or credit risk does not justify it.
For microbusiness customers specifically, Ofgem's SLC 7A and the associated microbusiness protections impose additional obligations. Suppliers must not treat microbusiness customers in a way that is unnecessarily burdensome or that takes advantage of the customer's lower bargaining position. Requiring prepayment metering where the credit risk is minimal or where the business has a credible repayment plan in place would be inconsistent with these obligations.
The right to a credit meter is not absolute: a supplier can require prepayment as a condition of supply where there is a legitimate credit risk. However, once the risk has been mitigated, through debt clearance, a period of satisfactory payment history, or the provision of a security deposit, the justification for maintaining prepayment metering falls away.
How to Request a Switch to Credit Metering
The process for moving from a prepayment to a credit meter involves four steps. Each must be completed in writing to create a clear record for any subsequent dispute.
Step 1: Establish eligibility. The supplier will assess whether the original reason for prepayment metering still applies. If the meter was required because of a prior debt, that debt must be cleared or covered by a formal repayment agreement. If it was required because of poor credit history, a period of 6 to 12 months of consistent top-up activity on the prepayment meter typically satisfies the supplier's credit assessment. Request the supplier's specific eligibility criteria in writing.
Step 2: Provide a security deposit if required. Some suppliers will agree to switch to a credit meter in exchange for a deposit, typically equivalent to one to three months of estimated consumption charges. The deposit is held against future non-payment and returned with interest after a defined period of satisfactory payment. The basis on which deposits are held and returned should be confirmed in writing before paying.
Step 3: Request the meter exchange formally. Write to the supplier's customer services team requesting the prepayment meter be replaced with a credit meter and confirming the basis of the request. Suppliers are required to respond to formal requests within a reasonable timeframe under their licence conditions.
Step 4: If refused, escalate through the complaints process. Where a supplier refuses to switch to a credit meter without providing a clear justification linked to a current credit risk, this constitutes a complaint. For microbusiness customers, the complaint can be escalated to the Energy Ombudsman if it reaches deadlock. The Ombudsman can direct a supplier to carry out a credit meter installation where the refusal is not properly justified.
Deposits as an Alternative to Prepayment
A security deposit provides a route to credit metering for businesses that have the cash available to lodge the required sum but want to avoid the ongoing cost premium of prepayment rates. The deposit amount is negotiated with the supplier and should reflect the actual credit risk rather than an arbitrary multiple of monthly charges.
Where a deposit is requested as a condition of supply, ask the supplier to confirm the exact conditions under which it will be held, the interest rate applied, the period after which it will be reviewed, and the circumstances in which it will be returned. These terms should be confirmed in writing as part of the supply contract. Disputes over the return of deposits are among the complaints types handled by the Energy Ombudsman for microbusiness customers.
Frequently Asked Questions
Editorial disclaimer: The following answers are provided for general guidance only. Specific circumstances, including the terms of your supply contract and the nature of any debt, will affect the options available to you. For advice tailored to your situation, contact Citizens Advice or an independent energy adviser.
Can a supplier install a prepayment meter without my consent?
For a commercial customer in debt or on a deemed contract, the supplier can require a prepayment meter as a condition of continuing supply. Physical installation of a prepayment meter at occupied premises without the occupier's agreement requires a warrant obtained through the magistrates' court. Suppliers cannot force entry to install a meter without this legal authority. The warrant process involves prior notice to the occupant and an opportunity to make representations.
Are prepayment meter rates regulated for business customers?
No. Ofgem's domestic prepayment meter price cap does not apply to non-domestic customers. Business prepayment rates are set by the supplier and are not subject to a regulatory ceiling. However, suppliers must publish their prepayment terms and cannot discriminate against microbusiness customers in a way that is prohibited by their supply licence conditions.
What happens if my prepayment meter runs out of credit during business hours?
When a commercial prepayment meter exhausts its credit, supply is interrupted until further credit is loaded. Unlike some domestic meters, there is no standard emergency credit provision on commercial PPMs. The business must top up via the supplier's designated mechanism, which may be a card, key, or online account. If supply interruption causes business losses, document the incident and raise a formal complaint if the interruption was caused by a metering fault rather than credit exhaustion.
Can I switch supplier while on a prepayment meter?
Switching is not possible where there is an outstanding debt on the meter point. The Debt Assignment Protocol (DAP) provides a mechanism for transferring debt to a new supplier where the new supplier agrees to accept it, but this requires the gaining supplier's agreement. Where no debt exists, switching from a prepayment to a credit meter can sometimes be achieved by switching supplier to one that offers credit terms for your premises, subject to their credit assessment.
How long does a credit meter installation take once agreed?
Once the supplier agrees to install a credit meter, the meter exchange is carried out by the Meter Operator appointed to the meter point. Scheduling typically takes 2 to 6 weeks depending on meter operator workload and the complexity of the installation. The supplier is responsible for coordinating the exchange and should confirm the appointment in writing.
How we verified this
This article draws on Ofgem's published Standard Licence Conditions for electricity and gas suppliers, Ofgem's microbusiness consumer guidance, and DESNZ non-domestic energy price statistics. The legal framework for meter installation and warrant procedures is based on the Gas Act 1986 and the Electricity Act 1989 as amended. Complaint and escalation rights are verified against the Ombudsman Services: Energy procedural guidance published at ombudsman-services.org.
Sources
- Ofgem Standard Licence Conditions for gas and electricity suppliers
- Ofgem microbusiness consumer protections
- Electricity Act 1989, legislation.gov.uk
- Ombudsman Services: Energy - complaint and escalation guidance
For related guidance on the costs that appear on a credit meter bill once you have made the switch, see the full breakdown at business energy bill explained. If debt on the meter point is the reason for prepayment status, the options available are covered in detail at business energy payment plans UK.
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