Ofgem has written to energy suppliers setting out its expectation that they review their obligations and processes on smart prepayment meter practices "as a matter of urgency", the regulator said in a decision published on 22 November 20221. The letter followed a Market Compliance Review of how suppliers support customers in vulnerable situations, which found that all suppliers had issues to address1.
The review assessed material suppliers provided in response to a request for information dated 4 July 2022, including market monitoring data on priority services registration and customers who self-disconnect or self-ration1. Ofgem divided suppliers into three groups according to the weaknesses it identified1.
| Group | Suppliers named | Ofgem's description |
|---|---|---|
| First | British Gas, Bulb, EDF, E.ON, Ovo, Scottish Power, Utility Warehouse | Minor weaknesses; most required processes, procedures and training in place, with some areas for improvement |
| Second | E (Gas & Electricity), Ecotricity, Green Energy UK, Octopus, Shell | Moderate weaknesses; processes generally in place but in some cases not adequately documented, with insufficient controls and governance |
| Third | Good Energy, Outfox, SO Energy, TruEnergy, Utilita | Severe concerns; no consistent and structured approach demonstrated to identifying and supporting customers in vulnerable situations |
Ofgem said the third group put consumers at "a serious risk of poor and potentially serious outcomes" and that there was a clear need for rapid and significant improvement1. It has started compliance engagement with all suppliers and asked them to act on the weaknesses identified; it said suppliers are implementing improvement plans1.
Among the licence obligations Ofgem set out is ensuring that prepayment meters, including smart meters switched to that mode, are used only when safe and reasonably practicable in all the circumstances of the case, and providing appropriate support to customers in vulnerable situations using prepayment meters who have self-disconnected, self-rationed or are at risk of doing so1.
"We have written to suppliers on remote switching of smart meters to prepayment mode with our expectation that they review their obligations and processes on smart prepayment meter practices as a matter of urgency"
Separate guidance states that switching a smart meter to a prepayment meter remotely, without exploring other repayment options, is against Ofgem's rules, and that Ofgem has confirmed it will take action where these rules have been broken2. The rules covering prepayment meters and vulnerable customer protections sit alongside the wider supplier obligations on smart meters that Ofgem oversees.
Why it matters for households
A smart meter can be changed to prepayment mode without a visit, so the switch can happen remotely rather than at the property. For a household, the practical difference is that energy is paid for in advance: credit runs down and supply can stop when it reaches zero, rather than a bill arriving afterwards. That makes the accuracy of a supplier's records and the way it identifies customers in vulnerable situations central to whether a home keeps its supply.
The review found weaknesses in exactly those areas, including identifying customers in vulnerable situations, training customer-facing staff, and demonstrating that using prepayment meters, including smart meters switched to this mode, is appropriate1. For a household, the difference between a meter in credit mode and one in prepayment mode is the difference between paying after use and paying before use, and between a debt being recovered over time and supply being interrupted. Households wanting to understand the mechanics can read our guide to smart prepayment meters and smart pay as you go, and the question of whether a smart meter can be switched to prepayment without consent is covered separately. The wider picture of what metering data does for a home's control over its own energy is set out in smart meters, monitoring and energy independence.
What happens next
Ofgem said it will consider what further action may be necessary in line with its Enforcement Guidelines where it has serious ongoing concerns with suppliers1. Suppliers are implementing improvement plans following the feedback1. No dates for completion of those plans, and no figures for the number of meters switched remotely, have been reported.