Ofgem has told energy suppliers to uninstall prepayment meters that have been wrongly force-fitted and pay compensation now, rather than wait for the outcome of a review.
The watchdog is examining the prepayment meter market after it emerged that suppliers were routinely fitting thousands of meters to recover debts by using court warrants to gain entry into people’s homes, including those of vulnerable people.
Ofgem has told suppliers to pause the forced installation of prepayment meters (PPMs), but the ban will last only until 31 March, when its review is due to conclude.
The energy regulator has now laid out the parameters of an investigation into the sector, and into the actions of British Gas, after a Times report this month revealed that debt agents working for the supplier had broken into the homes of vulnerable people.
That followed months of calls from charities and MPs to tackle prepayment meters, amid evidence that people were being switched on to prepayment tariffs remotely and cut off from heat and power as they could not afford to top up.
On Tuesday, Ofgem’s chief executive, Jonathan Brearley, said: “I’m telling suppliers not to wait for the outcome of our reviews and to act now to check that PPMs have been installed appropriately and, if rules have been broken, [to] offer customers a reversal of installations and compensation payments where appropriate. There will also be fines issued from Ofgem if the issue is found to be systemic.”
The regulator has set out the parameters of its compliance review, which will look at how executives at energy suppliers scrutinise decisions to switch households on to prepay; what company policies exist; how vulnerability is identified in their customers; and what compulsory training programmes they use.
A separate investigation, into British Gas, will look at whether the company takes every action possible before switching a customer on to prepay; how it assesses a customer’s “mental capacity and/ psychological state”; and assess whether agents are “fit and proper” to visit and enter customers’ homes.
Brearley said: “I am concerned about the way customers in already distressing situations are being treated when suppliers force them on to PPMs. That’s why, today, we have set out further details on the two investigations, one into British Gas for potential breaches that have been alleged indicating that something went very badly wrong at British Gas and the other into PPMs across all suppliers to assess whether this is an isolated case.”
Gillian Cooper, the head of energy policy at Citizens Advice, said: “We’ve seen far too many cases of people who are struggling to pay their bills being forced on to a prepayment meter despite clear evidence this isn’t safe for them … Ofgem is right to repeat our call for suppliers to check if customers need to be moved off a prepayment meter.
“If suppliers don’t heed this call, the regulator must be ready to step in. If progress isn’t made, the government must take action.”
There are also concerns that people on prepayment meters are missing out on government support designed to cushion the blow of rising bills.
Brearley was asked on Tuesday morning whether he had considered resigning after calls from the former prime minister, Gordon Brown, for him to quit. He did not answer the question directly, instead telling BBC Radio 4’s Today programme: “We’re going through the biggest energy crisis I think we’ve ever had in our history.”
He added that the industry was investigating a social tariff to help low-income households with their energy bills and urged consumers to “do your homework” before locking in fixed-price deals, amid signs that offers to encourage switching will soon return to the sector.
