Ofgem's review of prepayment meter installations has concluded, and customers of the eight suppliers involved who had a prepayment meter wrongly installed to recover energy debt, or where supplier processes were not followed adequately, between 1 January 2022 and 31 January 2023 are due compensation1. The amount depends on the level of detriment in each case1.
Affected customers will be contacted directly by their supplier, and compensation should be paid automatically1. The review covers the period to 31 January 2023, and the suppliers involved have not been named in the information available1.
The wider rules on forced prepayment meter installation sit alongside a separate change to prepayment pricing. From 1 July 2023, households with prepayment meters are not charged more for their energy than those on other payment methods1. From April 2024, Ofgem is reviewing ways to permanently remove the so-called premium on prepayment meter prices1. Prepayment customers remain covered by the price cap on most standard variable prepayment tariffs1.
"customers identified as having had a prepayment meter wrongly installed to recover energy debt, or where processes were not followed adequately by their energy supplier, between 1 January 2022 and 31 January 2023 will be due compensation (dependent on the level of detriment.)"
| Item | Detail |
|---|---|
| Compensation period | 1 January 2022 to 31 January 20231 |
| Suppliers involved | Eight1 |
| Who is contacted | Affected customers, directly by their supplier1 |
| How payment is made | Automatically1 |
| Prepayment price premium removed | From 1 July 20231 |
| Ofgem review of permanent removal | From April 20241 |
Why it matters for households
A prepayment meter changes how a home pays for energy: credit is bought in advance, typically by key or card topped up at local shops, rather than billed after use1. That makes the meter a direct constraint on how much energy a household can draw at any time, and it puts the household in a different position from one on a standard credit meter, which Age UK describes as the most common type of electricity meter1.
The compensation covers cases where the switch to prepayment was not done properly, so it addresses a specific group rather than prepayment customers generally. For a household that was moved onto a prepayment meter to recover debt without the correct process being followed, the practical effect was a change in how energy was paid for and how much control the household had over its supply. The supplier conduct rules on prepayment and debt and the protections for vulnerable customers set out the framework that applies.
The removal of the prepayment price premium from 1 July 2023 also matters for running costs, because it ended a standing difference between what prepayment households and other households paid for the same energy1. Ofgem's review from April 2024 concerns making that change permanent1.
Smart meters, which record usage and send readings automatically and come with an in-home display showing use in kilowatt hours and its cost, are being offered to every household in England, Wales and Scotland, and there is no charge for installation1. A smart meter can operate in prepayment mode, which is a different arrangement from a traditional key or card meter.
What happens next
Suppliers are to contact affected customers directly, with compensation paid automatically1. No further dates for the review's outcomes have been reported.
Sources1 cited
- Types of energy meters explained | Age UK, ageuk.org.uk