Energy suppliers allowed to resume forced installation of prepayment meters

The energy regulator has warned suppliers over their conduct as a temporary ban on the forced installation of prepayment meters ends.

Ofgem said on Monday that it was allowing EDF, Octopus and Scottish Power to resume “involuntary” ‘Pay as you Go’ meter installations.

That was because the three firms had met conditions to restart the controversial practice.

It was outlawed by the watchdog industry-wide in February last year following an investigation that revealed how debt collectors had forced their way into the homes of vulnerable customers to install prepayment meters.

They can be fitted when a household is in debt and mean that energy is cut off if no up-front payments are made.

Charges for gas and electricity are typically higher for these customers than those who pay by direct debit.

Last year, Ofgem increased the requirements that suppliers must meet to help prevent more direct debit customers from being forcibly moved to pay-as-you-go.

These demand greater communication with struggling households. Prepayment meters cannot be fitted in the homes of people aged over 75 with no support in their house or in homes with children under two-years-old.

The new criteria also includes a demand that at least 10 attempts to contact a customer be made before any forced installation is considered.

To meet the conditions, firms must have completed several steps laid out by Ofgem such as audits of installations to date and offers of any appropriate compensation to households wrongfully treated.

The number of indebted homes has risen sharply as gas and electricity bills hit record levels, largely as a result of surging wholesale costs exacerbated by Russia’s war in Ukraine.

An additional 600,000 homes were on prepayment meters last year when the cost of living crisis peaked.

Ofgem’s new code, which is tied to a supplier’s operating licence, means they must be proactive when customers clearly need help.

Director general for markets, Tim Jarvis, said: “Protecting consumers is our number one priority.

“We’ve made clear that suppliers must exhaust all other options before considering forced installation of a prepayment meter, and consumers can help themselves by reaching out to their supplier as soon as possible if they think they won’t be able to pay their bill, so payment options can be discussed.

“Our rules on when, and how, a prepayment meter can be installed are clear and we won’t hesitate to take action if suppliers act irresponsibly.

“While nobody wants to see the practices uncovered last year repeated, we also know that allowing households to build up unsustainable amounts of debt isn’t the right thing to do either.

“Many households value the control that these pay-as-you-go meters offer over bills and how they can help with budgeting, and suppliers must also be able to recover debt to make sure those costs don’t end up on everyone else’s bills.”