Ofgem has announced an industry-wide investigation into the rapid growth in prepayment meter installations, and has warned all suppliers that it is unacceptable to impose forced installations on customers struggling to pay their bills before all other options have been exhausted and without carrying out thorough checks to ensure it is safe and practicable to do so1. The regulator's statement followed a Times investigation into forced prepayment meter installation for debt collection, published in the week to 2 February 20231.
Consumer Scotland, which reported the investigation, said Ofgem had also committed to a detailed assessment of prepayment meter installation with a focus on self-disconnections, remote switching and forced installations, and to a prepayment market compliance review1. Consumer Scotland said it supported both, and that it had previously highlighted a data gap on prepayment meter switching and called for enhanced monitoring of remote and legacy prepayment switches1.
"The suspension of forced prepayment meter installation is very welcome"
Citizens Advice, the statutory consumer advocate for energy, said the rules are clear but have not been followed, and that it had been calling for a ban on forced installations since last summer3. Its chief executive, Dame Clare Moriarty, said suppliers must conduct an immediate review to make sure no one has been left on a prepayment meter when it is not safe for them3. Gillian Cooper, head of energy policy, said serious reforms must be made before these suppliers can be trusted again2.
Both bodies gave figures on the scale of the problem. Consumer Scotland said there are 421,000 households already using prepayment meters in Scotland, that Scotland has a disproportionate number of households on prepayment meters, and that many of these are likely to be living in fuel poverty1. Citizens Advice said that in 2022 it saw more people unable to afford to top up their prepayment meter than for the entirety of the previous 10 years combined, and that by the end of last year it helped around 235,000 people with energy issues, more than 50 per cent higher than at the same point a year earlier and more than double the figure in 20202.
| Measure | Detail |
|---|---|
| Households on prepayment meters in Scotland | 421,0001 |
| Citizens Advice energy casework by end of 2022 | around 235,000 people, over 50 per cent higher than a year earlier2 |
| Unable to afford to top up in 2022 | more people than in the previous 10 years combined2 |
Why it matters for households
A prepayment meter requires credit to be added before energy is used, so a household that cannot top up can be left without heat or power. The figures above indicate how many households are already in that position, and how quickly the numbers have grown. The investigation and the compliance review concern how suppliers decide who is moved onto prepay, and whether the checks required before a switch are carried out. For a household, the practical questions are whether a meter was installed with consent, whether the property was assessed as safe and practicable for prepay, and what debt arrangements were offered first. Consumer Scotland said the precautionary principle approach should be applied to switching consumers to prepayment meters, and that the primary consideration for suppliers should be fulfilling their duty of care to customers while the reviews are under way1. It added that the 421,000 households already on prepayment meters in Scotland need existing protections to be proactively enforced and sufficient financial support to remain connected1.
What happens next
Consumer Scotland said the findings from its next Energy Affordability Tracker will be released soon, showing the impact of the winter period on consumers' ability to manage financially, afford their energy bills and on their wider health and wellbeing, and that its initial analysis suggests the data is likely to show a continuing disproportionate impact on those with prepayment meters1. The outcome of Ofgem's investigation and compliance review has not been reported.
Sources3 cited
- Ofgem’s actions welcome, but consumers currently on prepayment meters need support | Consumer Scotland, consumer.scot
- Citizens Advice responds to The Times investigation on forced prepayment meter installations - Citizens Advice, citizensadvice.org.uk
- Citizens Advice responds to Ofgem statement on forced prepayment meter installations - Citizens Advice, citizensadvice.org.uk