Concern for millions as Ofgem confirms forced prepayment meter ban ends in April
Concerns have been raised for vulnerable customers, after energy watchdog Ofgem confirmed the suspension on forced installations only extends until the end of March.
The move, revealed in a letter to suppliers, raises the prospect forced prepayment meters could return in April, when vulnerable households are set to receive less support from the energy price guarantee – with lower bills not expected until the latter half of 2023.
City A.M. exclusively revealed Ofgem ordered suppliers to halt the forced installation of prepayment meters of indebted customers, including warrants being processed through courts.
This followed an investigation, carried out by The Times, showing that third party debt agents working for British Gas had ignored signs customers were vulnerable and had broken into properties to install prepayment meters.
The government later announced a temporary suspension on installing forced prepayment meters had been agreed with energy suppliers – but neither Downing Street or Ofgem had given a date for the conclusion of the ban,
The March deadline does coincide with the publication window for Ofgem’s review of the industry’s treatment of vulnerable customers and prepayment meters.
Ofgem chief executive Jonathan Brearley, wrote: “We have received responses from you setting out preliminary findings of your internal reviews into how the installation of pre-payment meters under warrant and remote switches to smart pre-payment are carried out and managed.
We are reviewing your responses and we expect and require further information from you through the market compliance review process.”
What does Ofgem’s review mean for struggling customers?
The review could potentially conclude that the ban is extended – or made permanent as many debt charities have demanded.
The number of households struggling with energy bills risen sharply over the past year – as prices have climbed to record levels, largely as a result of surging wholesale costs exacerbated by Russia’s war in Ukraine.
Citizens Advice reported 3.2m people had been left without energy at some point last year after struggling to top up their meter amid the cost of living crisis.
Ofgem has begun preliminary work on a social tariff which could cut bills for low-income households. It is also studying how to reduce the cost of prepayment tariffs to bring them in line with direct debits.
However, Brearley also recognised a balance had to be struck to ensure suppliers weren’t burdened with debt, which could drive up costs across the industry, eventually being felt in household energy bills.
He said: “Some suppliers have expressed concerns on the levels of customer debt caused by a halt to warrant pre-payment meter installation and forced remote switch of smart meters to pre-payment mode.
“If this debt cannot be recovered from some customers, then this increases costs for suppliers.
“We are aware of the difficult balance here as unrecoverable debts from some customers may then be recovered from the bills of paying customers, many of whom are themselves struggling with paying their bills given the wider affordability issue.”