Prepayment switching must stop in Britain, says minister

Secretary of State for Business, Energy and Industrial Strategy Grant Shapps has written a letter to suppliers ordering them to stop switching customers to prepayment.

With Britain’s energy prices reaching record highs and exacerbated by the higher energy consumption of winter, increasing numbers of consumers are becoming vulnerable as they are challenged to meet their bills and reportedly leading to increasing numbers being switched to prepayment, either directly if they have a smart meter or having a prepayment meter installed.

While the numbers of such switchings are not known, reports have been appearing in the popular press for several months now and the issue gained further prominence in October 2022, when the comparison website Uswitch reported that the number of prepayment meters installed had risen by 60,000 in the six months from October 2021.

Since then reports have continued to emerge, including self-connections and consumers apparently being unaware that they were switched and then being disconnected when the credit runs out.

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In the letter, apparently motivated by these reports, Shapps said that suppliers must only install prepayment meters to recover debt “as a last resort”.

“The focus should be on repayment plans for customers in arrears, taking into account a customer’s ability to pay, in order to prevent going down the route of a prepayment meter,” Shapps wrote.

He also expressed particular concern about prepayment meters being installed under warrants applied for in bulk and whether customers are made aware when warrant applications are made, and requested the number of such installations under this route in the last year be made available.

At the same time Shapps also addressed a letter to the regulator Ofgem requesting the organisation to revisit compliance with regard to customers who are vulnerable as a matter of priority and for the full force of its powers to be used to improve compliance.

Among the requirements for suppliers are proactively identifying and recording domestic customers who are vulnerable, ensuring prepayment meters are used only when safe and reasonably practicable and providing appropriate support to customers in vulnerable situations using prepayment meters, who have self-disconnected or self-rationed or are at risk of doing so.

Current government consumer energy support schemes are the Energy Price Guarantee, which is expected to save the typical household around £900 (US$1,100) this winter, and the Energy Bills Support Scheme, which is providing a £400 discount.

For the latter scheme, the government has determined the independent suppliers E Gas and Electricity and Bulb to have the highest redemption rates, while Good Energy, Utilita and Scottish Power indicated the fewest.