Ofgem opened a statutory consultation on 28 June 2023 on proposals to strengthen protections for consumers who may be moved to a prepayment meter (PPM) involuntarily1. The consultation followed a call for evidence in February 2023 and the Involuntary PPM Code of Practice, which Ofgem published on 18 April 20232. The response deadline was 26 July 20231.
The consultation set out two main proposals: to modify supply licence conditions so that the key elements of the Code are integrated into a new SLC 28, which would replace and combine existing SLCs 28 and 28B, alongside additions and modifications to SLC 27A; and to update the existing Safe and Reasonably Practicable guidance to integrate the detailed and more prescriptive elements of the Code1. Ofgem said it needed to implement the measure so it was in place for winter 2023/241.
The background was a moratorium on involuntary PPM installations and smart meter remote mode switches, agreed with suppliers in February 2023, after Ofgem saw evidence that suppliers may not always have been complying with its rules1. Ofgem also launched a Market Compliance Review into involuntary PPM practices and opened an investigation into British Gas1. Ofgem's monitoring in 2022 showed a 44% increase in smart mode switches and 40% in traditional installations between 2021 and 20221.
On costs, Ofgem said the impact on bad debt was inherently uncertain and used two methods to calculate a total potential impact of 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 estimated that a full ban on PPMs would increase bad debt by between £472m and £599m, or from £21 to £27 per household1. The consultation also set out 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.
"We are consulting on proposals to strengthen protections for consumers that may be moved to a prepayment meter (PPM) involuntarily"
The consultation proposed that suppliers must not proceed with an involuntary PPM if a customer is in the 'do not install' category, and should take additional precautions for customers in the 'further assessment needed' category1. 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 credit1.
Why it matters for households
The rules under consultation concern the circumstances in which a supplier can move a household onto a prepayment meter without consent, and the support that follows. For a household facing debt, the practical questions are whether a PPM is safe and reasonably practicable for their circumstances, and what happens if it is not. The consultation proposed that certain households would never be considered suitable for an involuntary PPM, and that others would need further assessment before installation1. It also proposed post-installation requirements, including an initial £30 credit where a PPM is installed1.
The cost figures matter to every household because bad debt is recovered through the price cap and non-price cap practices, so costs not recovered from one customer are spread across others1. Ofgem's central estimate of the impact of the proposals was towards the lower end of £3 to £14 per household per year, against a much higher estimate for a full ban1. The consultation also noted that, in the absence of PPMs, suppliers would be likely to resort to alternative debt collection methods such as bailiff action1.
What happens next
The consultation closed on 26 July 20231. Ofgem said it would consider all responses and publish non-confidential responses alongside a decision on next steps1. The decision document records the stages as: call for evidence launched 21 February 2023; Involuntary PPM Code of Practice published 18 April 2023; and Stage 1 consultation open 28 June 20232.
Sources2 cited
- Statutory Consultation – Involuntary PPM, ofgem.gov.uk
- Involuntary PPM, ofgem.gov.uk