Anne McLaughlin MP has introduced a Private Members' Bill on Pre-payment Meters (Self-disconnection) under the Ten Minute Rule. The Bill was read a first time on 19 October 2022 and is due for Second Reading on Friday 24 March 20231.
The Bill addresses self-disconnection, which happens when a prepayment meter customer cannot afford to top up and the meter cuts out, or when they do not realise credit is running out1. In 2020 Ofgem reported 4.3 million electricity and 3.4 million gas prepayment meter customers, and said its data showed 1 in 7 customers self-disconnected during 2019, with Citizens Advice data suggesting numbers could be higher1. Ofgem added that around half of those self-disconnecting appear to experience a negative impact, including living in a cold home or financial distress1.
Citizens Advice figures show the number of people it saw in 2022 up to October who were unable to top up their prepayment meter was more than for the whole of the previous five years combined. The number seen having prepayment meters installed for debt was between 700 and 900 per month in nearly every month since November 2020, up from 400 to 500 in most months in the previous three years1.
On 30 September 2022 Citizens Advice published a report calling for a winter moratorium on moving customers to prepayment meters under warrant and on switching smart meters to prepay to recover debt, saying it should remain until April 20231. Ofgem's Letter to Suppliers in November 2022 expressed concern over remote switching of smart meters to prepayment mode, setting out obligations including identifying vulnerable customers, providing advance notice and assessing suitability after a switch1.
"Suppliers can't force-fit a prepayment meter under warrant for people in very vulnerable situations if they don't won't one, or charge them for warrant costs on debts. Nor can they use warrants on people who would find the experience very traumatic."
Warrant charges for debts are capped at £150 for everyone else1. Under the Energy Price Guarantee, which replaced the default tariff cap from 1 October 2022 to 31 March 2023, prepayment customers pay a lower unit price for electricity than direct debit customers but a higher unit price for gas, and higher standing charges than all other payment methods1. The table below sets out Great Britain averages including VAT for October to December 20221.
| Payment method | Electricity standing charge (p/day) | Gas standing charge (p/day) | Dual fuel standing charge (p/day) |
|---|---|---|---|
| Direct debit | 46.4 | 28.5 | 74.9 |
| Standard credit | 52.4 | 33.5 | 85.9 |
| Prepayment meter | 51.4 | 37.5 | 88.9 |
Why it matters for households
Prepayment meters require payment before energy is used, so a household that cannot top up loses supply immediately rather than building arrears1. The Bill's proposed grace period and debt management support would sit alongside existing supplier conduct rules on prepayment and debt and vulnerable customer protections1. For a home already managing tight budgets, the difference between a forced prepayment installation and an agreed repayment plan can determine whether supply continues through winter. The higher gas unit price and standing charges paid by prepayment customers under the Energy Price Guarantee mean the same gas use costs more than for a direct debit household1.
What happens next
The Bill is due for Second Reading on Friday 24 March 20231. A Commons Chamber debate on self-disconnection of prepayment meters was scheduled for Thursday 15 December 2022, chosen by the Backbench Business Committee and opened by Anne McLaughlin MP1.
Sources1 cited
- Subject:, researchbriefings.files.parliament.uk