Forced electricity prepayment re-authorised in Britain

Energy regulator Ofgem has re-authorised installation of prepayment meters on an involuntary basis by three suppliers, subject to certain conditions.

The three suppliers are EDF, Octopus Energy and Scottish Power, which have been authorised as meeting the conditions and further must follow a comprehensive set of new rules.

A moratorium on the practice was introduced in February 2023 after complaints on the practice, including forced entry by court warrant, and in particular that it was being used against vulnerable people.

Under the new rules, the three suppliers are able to install a prepay meter involuntarily as a last resort having met certain conditions.

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These include conducting an internal audit to identify wrongfully installed involuntary prepay meters prior to the moratorium and offering compensation and a return to a non-prepayment payment method to any affected customers and completing an independent assessment to verify their readiness to comply with the new rules.

Once the involuntary installations have restarted the suppliers also must provide regular monitoring data to Ofgem.

In addition, if a supplier installs a prepay meter in a property occupied by someone in the ‘do not install’ category set out in the licence conditions and have not followed the rules to make sure a prepayment meter is appropriate, they are expected to reinstate a credit meter within 24 hours and compensate the customer appropriately.

“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,” said Tim Jarvis, Director General for Markets at Ofgem.

“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.”

New rules for suppliers

Among the new rules put in place by Ofgem prior to an involuntary installation, suppliers must have made at least 10 attempts to contact the customer and carried out a site welfare visit.

They also must refrain from involuntary installations for the highest risk customers (the ‘do not install’ category) including households which require a continuous supply for health reasons, those with an older occupant aged 75+ without support in the house, those with children aged under 2 years old, and those with residents with severe health issues including terminal illness.

In other cases including children aged 5 years and serious medical or mental health conditions as well as temporary situations such as pregnancy or bereavement, the suitability of a prepay meter must be assessed prior to installation.

Under the new rules suppliers are required to contact customers if they miss two monthly or one quarterly payment, check to see if they are struggling with bills and if so, offer support such as affordable payment plans or repayment holidays.

Suppliers will also be required to publish the Citizens’ Advice ratings of their customer service so consumers can see how they compare on issues such as call wait times and quality of responses.

Ofgem has reported that the announcement also comes on the back of updated bad debt levels from the end of last year, which showed that the pause in fitting some prepay meters had been part of the contribution to the highest levels of energy debt ever, currently estimated at around £3 billion (US$3.8 billion).

Commenting on the announcement, Dhara Vyas, Deputy Chief Executive of Energy UK, said that involuntary installations are a last but necessary resort for cases where repeated attempts to address debt with the customer through other means have been unsuccessful.

While suppliers have a responsibility to try and prevent customers falling further into arrears as well as limiting the build-up of bad debt, the new and extended exempt categories and the pause itself mean that customer debt will inevitably increase.

“It underlines the need for the government to put in place targeted support for those customers most in need to help make bills more affordable and stop the build-up of debt in the first place.”