Energy suppliers warned over forcible prepayment meter installations

Energy watchdog Ofgem has warned suppliers they must only install prepayment meters by force to recover debt as a last resort after new research revealed some companies are using such tactics too often.

In an annual report on how suppliers treat their customers in vulnerable situations, including those in debt and at risk of being disconnected, the regulator said the number of meters installed under court warrant to recover customer debt rose to 84,000 last year, an increase of 6.9% and 2.41% respectively for gas and electricity customers since 2016.

While the report shows the UK’s energy suppliers have made some progress over the last year in how they treat vulnerable customers, the regulator has stated they must continue to do more to help ill, disabled or poor consumers deal with their energy bills, get out of debt and avoid being disconnected.

It shows three suppliers forcibly installed a much higher proportion of meters per head for their newly indebted customers than the industry average - Utility Warehouse (around five times more), British Gas (around double the industry average) and Ovo Energy (around a third more).

This month Ofgem launched an investigation into how Utility Warehouse manages indebted customers, including whether it is installing prepayment meters under warrant appropriately as a means of recovering debt.

Under Ofgem’s rules, suppliers must identify customers who are in or at risk of debt, and engage with them early to put them on manageable repayment plans. Prepayment meters must only be installed by force in a customer’s home using a warrant obtained by a court order as a last resort.

This year, Ofgem banned forcible installations for the most vulnerable and capped charges at £150, and expects such installations amongst all suppliers to come down next year.

Ofgem is also concerned that too many customers who owe money do not get the support they need from suppliers to help pay debt back. This is particularly the case for some smaller and medium suppliers, who on average have only 25% of their electricity customers who owe money because they are in debt or arrears on a manageable repayment plan, compared to 58% for larger suppliers.

Co-operative Energy and Solarplicity (formerly LoCO2) had the lowest proportion of electricity customers who owe money on repayment plans - only 11% and 4% respectively - compared to the national average of 52%, according to Ofgem’s report.

Suppliers are doing more to help other vulnerable customers. The number of disconnections for debt fell to an all-time low, dropping from 210 in 2016 to just 17 last year. This continues a long-term downward trend from a peak of 8,300 annual disconnections a decade ago, following a crackdown by Ofgem.

A record six million vulnerable electricity consumers and nearly 4.8 million gas consumers are now registered on their supplier’s priority services register, which allows them to get additional support services such as quarterly meter reads, to help them manage their energy day to day. This is an increase of 36% for electricity customers and 30% for gas on 2016.

Rob Salter-Church, interim executive director of consumers and markets at Ofgem, said: “We’re pleased that suppliers have almost stopped disconnecting customers who struggle to pay bills, but they could do much more.

“Some suppliers are very frequently using force to recover debt. Instead, they need to identify struggling customers and support them in paying money back as our rules require. Installing meters under warrant to recover debt must be an absolute last resort.

“Protecting vulnerable customers is a non-negotiable for suppliers. We expect all suppliers to reach out to these customers and respond to their needs, not exacerbate their difficulties. If they fail, we will take tough action.”

A spokesperson from Utility Warehouse said: “We’re very focused on protecting vulnerable customers because it’s the right thing to do.

“We only ever install prepayment meters under warrant as a last resort – and we’ve seen a marked decrease in the number we’ve installed in the past 12 months.”

OVO Energy suggested the report does not reflect recent changes it has made and claims there remains no acceptable industry-wide solution for customers who are unwilling or unable to pay for their energy.

A spokesperson from British Gas added: “Warrants are a way of keeping a customer’s energy supply running when they are in debt and have not contacted us about their bills.

“Customers can switch from a prepayment meter to a credit meter after they pass a credit check.”

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