Tens of thousands of Brits are set to receive payouts of up to £1,000 each after they were forced to install prepayment energy meters at home.
Energy firms are paying out more than £70million in compensation and financial support after watchdog Ofgem found they were forcibly switching customers to paying upfront after they fell behind on their bills.
In some cases, the regulator found this was being done without the consent of customers – sometimes by switching their smart meters to prepay tariffs remotely – and particularly affected vulnerable customers.
The practice was exemplified at its worst by agents acting on behalf of British Gas, who were observed using court warrants to demand entry into the homes of indebted customers in order to force them onto prepayment meters.
Revelations of the practice, detailed in a newspaper investigation in early 2023, sparked outrage and led to the practice being suspended. However, some firms have been given permission to resume force-fitting of meters.
Eight firms are paying out a total of £74million in both compensatory payouts and debt write-offs:
- Scottish Power
- EDF
- E.ON
- Octopus
- Utility Warehouse
- Good Energy
- Tru Energy
- Ecotricity
More than £70million of compensation is being paid out to energy customers who were forcibly switched to pre-paid meters
A newspaper investigation found that many vulnerable customers had been switched after falling behind on their bills
An Ofcom investigation even found that some customers with smart meters had been forced onto a prepaid tariff remotely
Of that, £55m has already been paid out, with £5.6million of compensation and £13million of debt support still to come.
Investigations are continuing into British Gas, Utilita and Ovo Energy, Ofgem said.
The forced installation of prepayment meters came to light at the peak of the cost of living crisis, when Russia’s invasion of Ukraine forced up energy prices.
An estimated 5.5million people fell behind on their energy bills in mid-2023, according to the Money Advice Trust, which saw many switched to prepaid energy meters.
Some were even switched remotely via their smart meters – a practice that, according to the parliamentary Public Accounts Committee, may have put people off from making the switch from a traditional meter.
After the Times investigation into British Gas exposed the forced installation of prepayment meters, Ofcom halted the practice pending an investigation.
It found suppliers ‘fell short of required standards’ in how customers had been treated.
Now, firms are only permitted to force the installation of prepayment meters unless a resident is over 75, or has children under the age of two, or has a terminal illness.
Companies who break the rules will face enforcement action and unlimited fines.
Dhara Vyas, chief executive of Energy UK, which represents energy firms, said suppliers had been working with Ofgem to ensure they stuck to the rules – but insisted there were occasions where forced fittings were justified.
She told the BBC: ‘Involuntary installations have been a last – but necessary – resort for cases where repeated attempts to address debt with the customer through other means have been unsuccessful.
‘It’s bad for customers to fall further and further into arrears, and bad debt ultimately drives up the prices that is paid by all customers.’
