Ofgem published a statutory consultation on 28 June 2023 proposing to strengthen protections for consumers who may be moved to a prepayment meter (PPM) without their consent. The regulator said it is consulting on turning its Involuntary PPM Code of Practice, published on 18 April 2023, into licence conditions and guidance1. Responses close on 26 July 20231.
The main proposal is a new Standard Licence Condition (SLC) 28 that would replace and combine existing SLCs 28 and 28B, alongside additions and modifications to SLC 27A1. Under the proposed SLC 28.7, 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 an Involuntary Prepayment Meter Credit and retention of the £150 warrant cost cap1. Ofgem said the measure needs to be in place for winter 2023/241.
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 a Market Compliance Review into PPM and opened an investigation into British Gas1. 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 assumed between 5% and 8% of meters were installed in this way1.
"We are consulting on proposals to strengthen protections for consumers that may be moved to a prepayment meter (PPM) involuntarily"
The consultation includes a summary impact assessment. Ofgem estimates the potential impact on bad debt of between £74m and £307m per year, or between £3 and £14 per household, using two methods, and said its current expectation is towards the lower end of that range1. It estimates a full ban on PPMs would increase bad debt by between £472m and £599m, or from £21 to £27 per household1. On benefits, Ofgem estimates £328m could be associated with the policy if it achieved a 4% reduction in excess winter deaths, with a high-sensitivity estimate of £676m1. It also cites an administrative cost of dealing with bad debt of £12m, or £0.50 per household1.
| Measure | Ofgem estimate |
|---|---|
| Bad debt impact, central to upper | £74m to £307m per year (£3 to £14 per household) |
| Bad debt impact, full ban on PPMs | £472m to £599m (£21 to £27 per household) |
| Benefit if 4% reduction in excess winter deaths | £328m (high-sensitivity £676m) |
| Administrative cost of bad debt | £12m (£0.50 per household) |
Why it matters for households
The proposals concern the point at which a supplier can move a household onto a prepayment meter to recover debt without the household's consent. Ofgem's own figures put the cost of the protections at between £3 and £14 per household per year in additional bad debt, recovered across the customer base, against a benefit estimate of £328m if excess winter deaths fell by 4%1. For a household already on a prepayment meter, the practical effect is a defined process before installation: a welfare visit, independent assessment by another team or individual, and an initial £30 credit where a PPM is installed1. Ofgem said suppliers must not proceed where a customer is in the "do not install" category and should take additional precautions for those in the "further assessment needed" category1. The rules sit alongside the existing prepayment meter and vulnerable customer protections and the wider Ofgem licensing framework. For households, the question of whether a smart meter can be switched to prepayment without consent is central to energy independence, because a remote mode switch changes how a home pays for power without a visit.
What happens next
The consultation closes on 26 July 20231. Ofgem said it will publish non-confidential responses alongside a decision on next steps on its website1. It said the measure needs to be in place for winter 2023/241.
Sources1 cited
- Statutory Consultation – Involuntary PPM, ofgem.gov.uk