Ofgem published a statutory consultation on 28 June 2023 setting out proposals to strengthen protections for consumers who may be moved to a prepayment meter (PPM) involuntarily1. The regulator said it had built on the proposals developed in its Involuntary PPM Code of Practice, published on 18 April 2023, and is consulting on turning that Code into licence conditions and guidance1. Responses close on 26 July 20231.
The main proposal is to introduce a new Standard Licence Condition (SLC) 28 that would replace and combine the existing SLCs 28 and 28B, alongside additions and modifications to SLC 27A1. Ofgem said the measure needs to be in place for winter 2023/241. Under the proposed drafting, a licensee must not install an Involuntary Prepayment Meter unless each of the requirements set out in guidance issued under SLC 28.4 is satisfied1. The consultation also covers renamed vulnerability categories, a debt completion assessment, and updated guidance on what is safe and reasonably practicable1.
The document sets out the background. Ofgem agreed a moratorium on involuntary PPM installations and smart meter remote mode switches with suppliers in February 2023, launched an investigation into British Gas, and opened a Market Compliance Review into PPM practices1. It said monitoring in 2022 showed a 44% increase in smart mode switches and a 40% increase in traditional installations between 2021 and 20221. Ofgem also said it had assumed between 5% and 8% of meters were installed in this way, and that bad debt costs rose by between £25m and £30m per month in February and March 20231.
The consultation includes a summary impact assessment. Ofgem estimates the total potential impact of the proposals at between £74m and £307m per year, or between £3 and £14 per household, with its current expectation towards the lower end of that range1. It puts the most likely estimate of the administrative cost of dealing with bad debt at an increase of £12m, or £0.50 per household1. On benefits, Ofgem estimates £328m under its most likely scenario and £676m under a high-sensitivity estimate, including a benefit of £328m if the policy achieved a 4% reduction in excess winter deaths1. It reports a quantified consumer cost:benefit ratio of at least 1:8 under the most likely scenario and at least 1:2 under the high-sensitivity scenario1. For a full ban on new PPMs, Ofgem estimates additional bad debt of £472m, or £21 per customer, with a range of £472m to £599m, or £21 to £27 per household1.
"We are consulting on proposals to strengthen protections for consumers that may be moved to a prepayment meter (PPM) involuntarily"
The proposed process would require suppliers to check a customer's suitability before installation, with a "do not install" category and a "further assessment needed" category carrying additional precautions1. Where a supplier does want to install a PPM, it would need to carry out a welfare visit and have the case independently assessed by another team or individual, and provide the customer with an initial £30 credit where a PPM is installed1. Ofgem estimates the impact for the "further assessment needed" group alone at £37m, or £2 per customer1.
Why it matters for households
The rules govern when a supplier can move a household onto a prepayment meter without consent, which changes how a home pays for its energy and how it manages a debt. The consultation states that suppliers should use involuntary PPM as a last resort, and that existing rules already bar installation where it would not be safe, for example where a customer depends on electrically powered medical equipment1. The proposals would put the April 2023 Code into the licence, so the assessment process, the vulnerability categories and the aftercare requirements would become enforceable conditions rather than voluntary practice. For a household, the practical effect is a defined check before installation, an independent review of the case, a welfare visit, and an initial £30 credit on the meter1. The impact assessment also notes that groups could experience an increase in energy use of up to 10%1. Ofgem's cost figures show the trade-off it is weighing: tighter protections reduce harm for affected households but may raise bad debt costs recovered from the wider customer base through the price cap1. The consultation does not report a decision on the final licence text.
What happens next
The response deadline is 26 July 20231. Ofgem said it will publish non-confidential responses alongside a decision on next steps on its website, and that it needs to implement the measure so it is in place for winter 2023/241.
Sources1 cited
- Statutory Consultation – Involuntary PPM, ofgem.gov.uk