Why the problem of prepayment meters won’t go away for vulnerable energy customers

Published

2 years ago

February 3, 2023

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One thing the energy industry agrees on in theory – if not, it turns out, in practice – is that forcing prepayment meters on vulnerable customers is unacceptable.

The widespread revulsion at British Gas debt collectors forcing entry to the homes of families is deserved and universal.

Less clear-cut is what to do about the underlying cause.

The industry calls it the “affordability crisis” but those facing the reality know it simply as poverty.

Forced installation of prepayment meters (PPMs) is a miserable practice that, until the energy crisis, existed at the margins, affecting only the poorest or most reluctant of bill payers.

The explosion in energy prices has pushed it closer to the mainstream.

PPMs are supposed to be a last-resort in response to a challenge that has always faced utility providers; what to do about those households who cannot or will not pay their bills, and who continue to run up unsustainable debt?

Forty years ago, when gas and electricity meters were commonplace and tampering was a criminal, occasionally fatal, offence, affordability was self-regulating. If you did not have 50p to feed the meter the lights stayed off.

In the age of near universal connection the responsibility for balancing ability and willingness to pay, and the right to essential utilities, lies with the energy companies themselves.

It’s an issue the regulator Ofgem has grappled with since its inception.

An ongoing issue for Ofgem

In 2009 it asked suppliers not to disconnect pensioners or any home with under-18s in the coldest months between October and March, and to reconnect anyone inadvertently cut off within 24 hours.

In the last decade PPMs have been the mechanism for managing debt. They are supposed to prevent customers from going deeper into arrears by requiring them to pay upfront with payment cards or emergency credit from suppliers.

In practice they are a digital version of the old coin meters. Those who cannot pay end up self-disconnecting.

Ofgem’s licence conditions have banned forced installation for vulnerable customers since 2018, and “suppliers must not disconnect certain vulnerable customers during the winter, or disconnect anybody whose debt the supplier has not taken all reasonable steps to recover first by using a PPM”.

That was plainly not the case in the British Gas examples highlighted by The Times, but it should be said even Ofgem believes PPMs have a place.

Support for prepay meters

Its chief executive Jonathan Brearley told MPs this week they were a reasonable recourse for customers who can pay but will not.

Underlying that is the reasonable assumption that suppliers should get paid, and that they have a responsibility to ensure customers do not run up unsustainable debts.

The practical challenge of the current crisis is straining those principles.

The energy industry and charities estimate up to 40% of households are spending more than 10% of their income on energy.

Ofgem’s own figures show close to one million people are in arrears on electricity payments and nearly 800,000 for gas, with no agreed plan to manage debt reduction.

The least well-off customers are routinely offered payment plans or emergency credit, around half of which is never repaid.

Retail suppliers privately say they cannot afford to offer such support on the scale that may currently be required.

Industry sources say the collective debt book is thought to run to around £2.5bn – around £2bn of which is considered bad debt.

The week that Shell announced profits of more than £32bn is a tough one in which to plead poverty, but the retail industry is separate from energy production, with regulated prices that have seen almost 30 companies forced out of business in the last 18 months.

A watershed moment for those in the market to reconsider?

That’s why, with wholesale prices falling, suppliers are calling on government to cancel a scheduled reduction in energy support that will increase prices, and distress to the poorest households, from April.

There’s little question that for those on the receiving end, forced installation of a PPM is a dehumanising bureaucratic device.

It’s possible too that anyone who runs up unsustainable debts heating their home satisfies a definition of vulnerability.

The industry-wide pause on using court warrants gives everyone with a stake in the market a chance to reconsider and may prove a watershed but there are no easy options or solutions.

Ofgem has recently argued for a subsidised social tariff, offering cheaper rates to defined vulnerable groups. The review of PPMs may also ask if it is ever okay to allow someone to be cut off.

Water companies cannot turn off the taps, but if the same applied to energy, how can commercial supply be sustainable in a medium term of elevated energy costs?

A meaningful review will have to examine the court process, which since the cost of living crisis has seen magistrates asked to approve hundred of warrants at a time and take suppliers at their word that due diligence has been done.

Unless government legislates to remove suppliers right to access customers homes the court process will be central to reform.

Centrica chief executive Chris O’Shea said this week that the plight of his energy customers was symptomatic of a wider affordability crisis for basic essentials, including housing.

As the man ultimately responsible for British Gas’s actions he may not be the most sympathetic witness, and the answer can never be to drill the locks of the disabled, but he had a point.

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Trump fires tariff threats at more nations as EU ‘ready for all scenarios’

Published

4 hours ago

July 9, 2025

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Trump fires tariff threats at more nations as EU 'ready for all scenarios'

Donald Trump has revealed a list of more nations set to face delayed ‘liberation day’ tariffs from 1 August.

He has threatened tariffs of 30% on Algeria, 25% on Brunei, 30% on Iraq, 30% on Libya, 25% on Moldova and 20% on the Philippines. Sri Lanka was later told it faced a 30% duty.

Letters setting out the planned rates – and warning against retaliation – are being sent to the leaders of each country.

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They were the latest to be informed of the president‘s plans after Japan and South Korea were among the first 14 nations to be told of the rates they must pay on their general exports to the US from 1 August.

The duties are on top of sectoral tariffs, covering areas such as steel and cars, already in place.

Mr Trump further warned, on Tuesday, that a 50% tariff rate on all copper imports to the US was looming.

He has also threatened a 200% rate on pharmaceuticals and is also expected to take aim at all imports of semiconductors too.

The European Union, America’s largest trading partner in combined trade, services and investment, is expected to get a letter within the next 48 hours unless further progress is made in continuing talks.

The bloc, which Mr Trump has previously claimed was created to “screw” the US, has been in negotiations with US officials for weeks and working to agree a UK-style truce by the end of the month.

The EU has retaliatory tariffs ready to deploy from 14 July but it is widely expected to delay them until such time that any heightened US duties are imposed.

It remains hopeful of a deal in the coming days but European Commission president Ursula von der Leyen told the European Parliament: “We stick to our principles, we defend our interests, we continue to work in good faith, and we get ready for all scenarios.”

While the UK’s so-called deal with Mr Trump is now in force, it remains unclear whether steelmakers will have to pay a 50% tariff rate, deployed by the US against the rest of the world, as some final details on an exemption are yet to be worked out.

The rate is currently 25%.

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Nvidia wins race to become first $4trn listed company

Published

7 hours ago

July 9, 2025

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Nvidia wins race to become first trn listed company

Nvidia has become the first stock market-listed company to achieve a value of $4trn.

Its share price rose by more than 2% at the market open on Wall Street to reach the milestone moment.

It was achieved just over a year since Nvidia overcame the $3trn barrier and overtook Apple, in market cap terms, in the process.

The AI-focused chipmaker has been the darling of Wall Street for many years.

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The value of its shares has risen by 409,825% since its market debut in 1999.

Its status has been cemented thanks to the rush for AI technology – suffering several wobbles along the way – but nothing significant when you refer to the percentage rise of the past 26 years.

The most recent pressures have come from the emergence of the low-cost chatbot DeepSeek and concerns for global AI demand as a result of Donald Trump’s trade war hitting growth.

Financial markets have been taking a more risk-on approach to the trade war since the delays to “liberation day” tariffs in April.

It’s explained by a market trend that’s become known as the TACO trade: Trump always chickens out.

It has helped US stock markets post new record highs in recent days.

The wave of optimism is down to the fact that the president is yet to follow through with the worst of his threatened tariffs on trading partners.

Corporations are also yet to report big hits to their earnings – a fact that is also propping up demand for shares.

If Mr Trump does go all-out in his trade war, as he has now threatened from 1 August, then that $4trn market value for Nvidia – and wider stock markets – could be short-lived, at least in the short term.

But market analysts believe Nvidia’s value has further to go.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said of its meteoric rise: “Once known for powering video games, NVIDIA has transformed into a foundational player in AI infrastructure.

“Its high-performance chips now drive everything from natural language processing to robotics, making them essential to training and deploying advanced AI models.

“Beyond hardware, its full-stack ecosystem – including software platforms and developer tools – helps companies scale AI quickly and efficiently. This end-to-end approach has positioned Nvidia as a cornerstone in a market where speed, scalability, and efficiency are critical.”

He added: “The key question is where it goes from here, and while it might seem strange for a company that’s just passed the $4trn mark, Nvidia still looks attractive.

“Growth is expected to slow, and it’s likely to lose some market share as competition and custom solutions ramp up. But trading at a relatively modest 32 times expected earnings, and over 50% top-line growth forecast this year, there’s still an attractive opportunity ahead.

“For investors, it remains a compelling way to gain exposure to the AI boom – not just as a participant, but as one of its architects.”

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Greater risk to UK economy following Trump’s tariffs, says Bank of England

Published

7 hours ago

July 9, 2025

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Greater risk to UK economy following Trump's tariffs, says Bank of England

The future of the UK economy is weaker and more uncertain due to President Trump’s tariffs and conflict in the Middle East, the Bank of England has said.

“The outlook for UK growth over the coming year is a little weaker and more uncertain,” the central bank said in its biannual health check of the UK’s financial system.

Economic and financial risks have increased since the last report was published in November, as global unpredictability continued after the announcement of country-specific tariffs on 2 April, the Bank’s Financial Stability Report said.

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These risks and uncertainty, as well as geopolitical tensions, like the wars in Ukraine and the Middle East, are “particularly relevant” to UK financial stability as an open economy with a large financial sector, it said.

Pressures on government borrowing costs are “still elevated” amid significant doubts over the global economic outlook.

Had a 90-day pause on tariffs not been announced, conditions could have worsened, the report added.

The chance of prices rising overall has also grown as tensions between Iran and Israel and the US threaten to push up energy prices.

Possible higher inflation in turn raises the prospect of more expensive borrowing from higher interest rates to bring down those price rises. This compounds the pressure on state borrowing costs.

Mortgages

Borrowing costs for about 40% of mortgage holders are set to become costlier over the next three years as households refix to more expensive deals, affecting 3.6 million households, the Bank said.

Many homes have not refixed their mortgage since interest rates began to rise in 2021, meaning the full impact of higher rates has yet to filter through.

Those looking to get on the property ladder got a boost as the Bank said lenders could issue more loans deemed to be risky, meaning people could be able to borrow more.

Financial institutions can now have 15% of their new mortgages deemed risky every year, up from the current 9.7%.

Riskier mortgages are those with a loan value above 4.5 times the borrower’s income.

Be ‘prepared for shocks’

Despite the global and domestic economy concerns, the outlook for UK household and business resilience remained “strong”, the Bank said.

Investors, however, were warned that there could be “sharp falls in risky asset prices”, which include shares and currencies.

If there are any vulnerabilities in non-bank lenders, it “could amplify such moves, potentially affecting the availability and cost of credit in the UK”.

“It is important that in their risk management, market participants [people involved in investing] are prepared for such shocks.”

The steep market reaction following the tariff announcements in April “highlights that the interconnectedness of global financial markets can mean stress from one market can move quickly to others,” the report said.

Overall, though, “household and corporate borrowers remain resilient”, the Bank concluded.