Energy regulator reveals end to forced installation of prepayment meters is temporary
The energy regulator's investigation into the treatment of vulnerable customers could yet recommend a permanent ban on the practice, as debt charities have demanded.
Ofgem has revealed that the end of forced installation of controversial energy prepayment meters only extends until the end of March.
The watchdog said the date, that household energy suppliers had agreed to, also included a temporary halt to remote transfers for customers currently on smart meters.
The government had suggested last week that the practice of forcing indebted customers onto prepayment meters had ended with the agreement of firms.
There was no suggestion that the date was temporary though it coincides with the 31 March deadline for Ofgem to complete its subsequent review of the treatment of vulnerable customers.
The probe was ordered by the government following a newspaper investigation that revealed debt collectors working on behalf of British Gas had forced their way into the homes of vulnerable customers, including people with disabilities.
The Times further claimed that employees of the company used by British Gas were incentivised with bonuses to fit prepayment meters.
They are controversial because gas and electricity typically costs more while they also leave users at the mercy of decisions between heating or eating amid the wider cost of living crisis.
Suppliers were asked to review their processes for dealing with customers in arrears as part of the regulator's "intensive" investigation.
The number of struggling households has risen sharply over the past year as gas and electricity bills have hit record levels, largely as a result of surging wholesale costs exacerbated by Russia's war in Ukraine.
An additional 600,000 homes were on prepayment meters last year.
Confirmation that the forced installation ban was temporary came in a letter to suppliers from Ofgem's chief executive Jonathan Brearley, who was updating executives on the progress of its review.
He wrote: "Further to our letter on Ofgem's expectations regarding the treatment of domestic customers during prepayment meter installations, as discussed during our conversation on 9 February 2023, you have agreed to our request to immediately halt forced installations and remote transfers to pre-payment meters until the end of March 2023."
He said their respective preliminary submissions to the review were currently being examined, pending further consultation.
The review could potentially conclude that the ban is extended - or made permanent as many debt charities have demanded.
But in a nod to industry frustration over soaring levels of arrears, Mr Brearley added: "Some suppliers have expressed concerns on the levels of customer debt caused by a halt to warrant pre-payment meter installation and forced remote switch of smart meters to pre-payment mode.
"If this debt cannot be recovered from some customers, then this increases costs for suppliers.
"We are aware of the difficult balance here as unrecoverable debts from some customers may then be recovered from the bills of paying customers, many of whom are themselves struggling with paying their bills given the wider affordability issue.
"We have an ongoing programme of work to assess costs to suppliers from customer debt. Once we have analysed your responses to our request for information on debt, we will be able to determine what action we need to take and, if an adjustment is required, we will act quickly."
The watchdog said the date, that household energy suppliers had agreed to, also included a temporary halt to remote transfers for customers currently on smart meters.
The government had suggested last week that the practice of forcing indebted customers onto prepayment meters had ended with the agreement of firms.
There was no suggestion that the date was temporary though it coincides with the 31 March deadline for Ofgem to complete its subsequent review of the treatment of vulnerable customers.
The probe was ordered by the government following a newspaper investigation that revealed debt collectors working on behalf of British Gas had forced their way into the homes of vulnerable customers, including people with disabilities.
The Times further claimed that employees of the company used by British Gas were incentivised with bonuses to fit prepayment meters.
They are controversial because gas and electricity typically costs more while they also leave users at the mercy of decisions between heating or eating amid the wider cost of living crisis.
Suppliers were asked to review their processes for dealing with customers in arrears as part of the regulator's "intensive" investigation.
The number of struggling households has risen sharply over the past year as gas and electricity bills have hit record levels, largely as a result of surging wholesale costs exacerbated by Russia's war in Ukraine.
An additional 600,000 homes were on prepayment meters last year.
Confirmation that the forced installation ban was temporary came in a letter to suppliers from Ofgem's chief executive Jonathan Brearley, who was updating executives on the progress of its review.
He wrote: "Further to our letter on Ofgem's expectations regarding the treatment of domestic customers during prepayment meter installations, as discussed during our conversation on 9 February 2023, you have agreed to our request to immediately halt forced installations and remote transfers to pre-payment meters until the end of March 2023."
He said their respective preliminary submissions to the review were currently being examined, pending further consultation.
The review could potentially conclude that the ban is extended - or made permanent as many debt charities have demanded.
But in a nod to industry frustration over soaring levels of arrears, Mr Brearley added: "Some suppliers have expressed concerns on the levels of customer debt caused by a halt to warrant pre-payment meter installation and forced remote switch of smart meters to pre-payment mode.
"If this debt cannot be recovered from some customers, then this increases costs for suppliers.
"We are aware of the difficult balance here as unrecoverable debts from some customers may then be recovered from the bills of paying customers, many of whom are themselves struggling with paying their bills given the wider affordability issue.
"We have an ongoing programme of work to assess costs to suppliers from customer debt. Once we have analysed your responses to our request for information on debt, we will be able to determine what action we need to take and, if an adjustment is required, we will act quickly."
