Ofgem says ban on forced prepayment meters will end in six weeks

A ban on the forced installation of prepayment meters will last just six more weeks despite calls from politicians to outlaw the practice.

Energy regulator Ofgem has said a temporary ban on installing prepayment meters under warrant would last until 31 March.

The prospect of a return to forced installations as soon as April may raise concerns among consumers facing a 40% hike in their bills.

Ofgem hurriedly ordered suppliers to halt the practice of forcing customers who fall behind on payments to prepayment meters after the Times reported that debt agents working on behalf of British Gas had ignored signs that customers were vulnerable.

British Gas then suspended the tactic, before Ofgem asked all suppliers to stop earlier this month. At the time, Ofgem did not give a date for the conclusion of the ban.

This also included a ban on suppliers remotely switching customers on to prepayment tariffs through their smart meter.

According to Sky News, Ofgem’s chief executive, Jonathan Brearley, said in a letter to suppliers that they had “agreed to our request to immediately halt forced installations and remote transfers to prepayment meters until the end of March 2023”.

Ofgem has committed to concluding a review on the treatment of vulnerable customers by 31 March, and could extend the ban or make it permanent.

An Ofgem spokesperson said this date would be when “the new rules will be ready pending our detailed investigation” and that it had asked suppliers to halt forced installations until then. The ban will remain in place “until the supplier boards can assure us that they are meeting their obligations”, the spokesperson said.

Suppliers have argued that installing prepayment meters allows them to recover debts and stops consumers amassing larger amounts of debt.

Brearley said: “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.”

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However, Citizens Advice found that 3.2 million people had been left without energy at some point last year after struggling to top up their meter amid the cost of living crisis.

An estimated 600,000 people were forced to make the switch away from credit meters after racking up debt with their energy supplier in 2022.

The government last week said all UK energy suppliers had agreed to end prepayment meter installation in vulnerable homes. Magistrates have also been asked not to process entry warrants. The Guardian revealed that more than 30,000 warrants had been issued by magistrates since the start of the year.

Ofgem has begun preliminary work on a social tariff which could cut bills for low-income households. It is also studying how to reduce the cost of prepayment tariffs to bring them in line with direct debits.