Ofgem said on 23 January 2023 that it will review whether energy companies have taken enough care over decisions to put customers onto prepayment plans, and will take further legal action if they have not. The announcement followed a letter from Business and Energy Secretary Grant Shapps to energy firms, asking them to take every possible step to help customers in payment difficulties before moving them onto prepayment meters1.
The government demanded that suppliers stop moving customers over to prepayment against their will, saying this should only be used as a last resort under Ofgem's rules1. Numbers of homes whose meters have been changed from standard to prepayment have soared in recent months, and some in vulnerable situations have been left without electricity and gas as a result1. The process required a court warrant, but courts are overwhelmed with applications and, according to the government, huge batches of disconnections have been approved in minutes1. The government is calling on energy firms to share the number of warrants to move customers to prepayment meters they have applied for in recent months1.
Ofgem Chief Executive Jonathan Brearley said:
"If we find that they have not taken due care in this process, we will take further legal action against them."
Under Ofgem's rules on prepayment and vulnerable customers, a supplier cannot make a customer move to prepayment if it is not safe or practical. The circumstances listed include being disabled or having a mental health condition that makes it hard to access, read or use the meter; having an illness that affects breathing; having an illness made worse by the cold; relying on medical equipment that needs electricity; a meter that is hard to reach or access; and difficulty getting to a shop where a top-up can be made1. You also cannot be moved to prepayment if you would not be able to top up your meter1.
Suppliers must also have followed set steps before a switch, as set out in the guidance on supplier conduct on prepayment and debt:
| Requirement | Minimum standard |
|---|---|
| Other ways to repay what is owed | Must have been offered, such as a repayment plan or payments through benefits |
| Time to repay debt before being told of a prepay move | At least 28 days |
| Notice before installing a prepayment meter | At least seven working days |
| Disputed debt | Cannot move a customer to prepayment if they do not agree they owe money and have told the supplier |
Source: Which?, 23 January 20231
Brearley said these are minimum standards and suppliers can voluntarily do more1. The government has suggested firms offer additional credit, debt forgiveness or debt advice instead, and is working with Ofgem to check that the process for suppliers taking warrants to court is fair, transparent and supports vulnerable customers1. Ofgem said it will look at its rules about when companies can apply for a court warrant to move a customer to prepayment and what steps companies must take first1. Some energy firms are already pausing remote switching of smart meters to prepayment mode, or giving some customers extra credit if they are struggling to pay1.
Why it matters for households
A prepayment meter changes how a home pays for energy: credit is bought in advance, and supply stops when the credit runs out. For a household already in debt, that can mean self-disconnection rather than a managed repayment plan. The rules described set the conditions a supplier must meet before a switch, including safety and practicality tests and notice periods, and they place limits on switching a customer who disputes the debt. The review concerns how those conditions were applied in practice, and whether the court warrant route used for some switches was fair. For a household, the practical question is whether a supplier followed the required steps before the meter was changed, and what evidence exists of that process. Ofgem has said it will take further legal action where due care was not taken, but no findings against named suppliers have been reported1.
What happens next
Ofgem will review whether companies took enough care over prepayment decisions and will examine its rules on court warrants and the steps suppliers must take first1. The government has asked firms to report the number of warrants they have applied for in recent months1. No date has been given for the completion of the review, and no outcome has been reported1.