Ofgem launched a statutory consultation on 28 June 2023 to make prepayment meter (PPM) protections mandatory as part of suppliers' licence conditions1. The regulator has also proposed a £13 allowance within the PPM price cap, which would let energy suppliers recover bad debts associated with Additional Support Credit (ASC), the credit they are obligated to provide to PPM customers in need1.
The consultation follows all energy suppliers agreeing to a voluntary Code of Practice earlier in the year, after media reports raised questions about the conduct of PPM installations carried out through the warrant process1. Ofgem said ASC "helps some of the most vulnerable PPM customers, by providing them with additional respite, when they are struggling the most, and prevents them from going off supply"1.
"Ofgem have launched (June 28th) a statutory consultation to make prepayment-meter (PPM) protections mandatory as part of suppliers' license conditions."
The British Gas Energy Trust, which published its response on 7 July 2023, questioned whether PPM reform addresses affordability. Its chief executive, Jessica Taplin, wrote that many people on prepayment meters might not pass creditworthiness checks, and cited Citizens Advice figures that 51% of those it sees with debt issues have negative budgets, against 36% before the pandemic1. The Trust made £16m in debt write-off grants to fuel poor customers last year1.
The Trust also set out the alternatives to prepayment. Credit accounts are regulated credit agreements under the Consumer Credit Act 1974, and the Consumer Credit sourcebook (CONC) requires companies to assess a customer's creditworthiness, including their ability to make repayments as they fall due1. Quarterly cash or cheque billing carries its own risks: the bill may be unknown until it arrives unless a smart meter is used, and money must be set aside to meet it1.
| Item | Detail |
|---|---|
| Consultation opened | 28 June 20231 |
| Proposed PPM price cap allowance | £131 |
| Purpose of allowance | Recovery of bad debts linked to Additional Support Credit1 |
| Prior step | Voluntary supplier Code of Practice earlier in 20231 |
| Trust debt write-off grants, last year | £16m1 |
Why it matters for households
Prepayment meters are one of the few ways a household can stay on supply while managing arrears, and the consultation concerns the rules that govern when a supplier can move a customer onto one without consent. The proposed £13 allowance would sit inside the prepayment price cap, meaning the cost of recovering bad debt from ASC would be carried within the rates paid by prepayment customers rather than outside the cap1. The Trust's figures suggest the sums involved are large: it extrapolated from its own £16m in write-off grants that debt impacts across all suppliers would likely run into the hundreds of millions1.
For a household's energy independence, the practical questions are who carries the risk of unpaid bills and what happens to the debt. The Trust asked whether suppliers, as commercial entities owing a duty to shareholders, can or should be forced to keep supplying a defaulting customer, and who then pays for that customer's energy1. It noted that prepayment meters have been used to manage debts since before privatisation, and that without them there is an argument bad debt would rise significantly and ultimately be paid for by everyone else1.
What happens next
The consultation is open, and the Trust said it would be interesting to read the views aired when it is published1. The Government has confirmed it is looking carefully at long term energy support, including potentially a social tariff, from April 20241.
Sources1 cited
- Ofgem launch consultation into involuntary PPM (Pre Payment-Meter) - British Gas Energy Trust, britishgasenergytrust.org.uk