Ofgem launched a call for evidence on prepayment meter (PPM) rules and protections on 21 February 20231. The regulator's later decision document records that date as the start of a sequence that ran through 2023: the call for evidence on 21 February, an Involuntary PPM Code of Practice published on 18 April, a statutory consultation opened on 28 June, and a final decision published on 13 September1.
The decision integrated the Involuntary PPM Code of Practice into Supply Licence Conditions and updated PPM Guidance, with the changes taking effect from 8 November 20231. Ofgem said the decision followed the call for evidence, the code developed with stakeholders, and the June consultation1.
The final decision set out which households should never have a prepayment meter installed involuntarily. Ofgem moved children under two into the "do not install" category, and moved over 75s with no other support in the household into the same category1. Households with children five and under remained in the "further assessment needed" category1. The regulator also added chronic obstructive pulmonary disease (COPD) as a collective term in "do not install", and added nutritional issues and learning disabilities, in addition to difficulties, into "further assessment needed"1. It retained expectations that suppliers satisfy themselves a PPM is safe and reasonably practicable for households with adults aged over 65 before installing one, and retained the proposal that suppliers are encouraged to satisfy children aged under 161.
On costs, Ofgem estimated bad debt could be £4 to £16 per household per year across a range of most likely scenarios, having earlier estimated the rise in bad debts would likely lead to increased costs at the lower end of between £3 and £14 per household1. It introduced a specific allowance to the price cap from 1 October 2023 for anticipated increased costs of bad debt associated with Additional Support Credit given to PPM customers, initially for 12 months1. In an update letter on 28 June 2023, Ofgem said that, given the evidence received up to that point, it considered there was not a material or systematic gap between the allowance within the price cap for debt-related costs, including bad debt, and actual costs1.
"we have decided to move children under two into the 'do not install' category"
| Group | Category after the decision |
|---|---|
| Children under two | Do not install |
| Over 75s with no other support in the household | Do not install |
| Households with children five and under | Further assessment needed |
| Adults aged over 65 | Suppliers must satisfy themselves a PPM is safe and reasonably practicable |
Why it matters for households
The rules govern when a supplier can force a prepayment meter on a household that has not chosen one, and when a smart meter can be switched remotely to prepayment mode1. For a home, the practical effect is that certain households are placed outside the scope of involuntary installation altogether, while others require an individual assessment before any installation1. The categories matter because a prepayment meter changes how energy is paid for and what happens when credit runs out, which bears directly on a household's control over its own supply. Ofgem acknowledged that fewer PPM installations, combined with the moratorium, could result in higher levels of bad debt, and that its expanded protections may lead to an increase in bad debts in the sector1. Those costs feed into the price cap allowance for debt-related costs, which is spread across households1.
What happens next
Ofgem said it expected to consult on the matter in spring 20241. The moratorium on involuntary PPM installations remained in place at the time of the September 2023 decision, with restart conditions suppliers had to meet before Ofgem would support renewed installations1. Ofgem said it would closely monitor installations as they restarted, and that failure to adhere to the rules would result in appropriate compliance and enforcement action1.
Sources1 cited
- Involuntary PPM, ofgem.gov.uk