28 June 2023 , 12:06
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Ofgem is to bring in tougher new rules to help protect prepayment meter energy customers.
Under the new proposals launched by the energy regulator today, the current voluntary rules for energy providers regarding prepayment meters will soon become "compulsory".
It comes after some energy suppliers, including British Gas, were caught breaking into the homes of people struggling to pay their bills to forcibly install a prepayment meter.
The regulator launched an investigation after the practice after it was exposed by the Times newspaper.
In May launched a "voluntary code of practice" which included a ban on forcibly installing prepayment meters into the homes of people over the age of 85.
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The majority of energy suppliers signed up to the voluntary code when it was launched.
However, the change proposed today would make the voluntary arrangements "binding" and part of a supplier's licence conditions.
Ofgem said the proposals would benefit consumers because energy suppliers will need to follow a stricter process when assessing whether to forcibly install a prepayment meter, and maintain a higher standard of aftercare support when they do.
Neil Kenward, director for strategy for Ofgem said: “We are committed to ensuring robust protections are in place for vulnerable customers.
"The voluntary Code of Practice for prepayment meters enhanced protections, setting clear rules for when a prepayment meter is or isn’t acceptable, as well as new requirements around the installation of prepayment meters.
"We are now seeking to make these voluntary arrangements binding, and we welcome all views on this Statutory Consultation.”
Alongside this, the regulator has also proposed that suppliers get compensated for the emergency credit offered to vulnerable prepayment customers.
Energy suppliers are obliged to offer Additional Support Credit (ASC) to prepayment customers who need it - such as if they have to "self-disconnect" from energy as they are unable to afford it.
Ofgem expected the level of additional credit to increase more this year due to Ofgem's clampdown on involuntary prepayment installations.
Currently, Ofgem says suppliers who offer this credit sometimes are not repaid and suppliers are not compensated for it.
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If the debt is not recovered in some way, Ofgem says it could force suppliers out of business and "then everyone has to pick up the tab".
The proposed allowance - which may be set at around £13 per typical prepayment meter customer's price cap level - is thought to fix this issue.
Neil Kenward added that the move would give energy suppliers "no excuse" not to offer additional credit to customers this winter.
Ofgem stated that it did not expect this practice to lead to prepayment customers paying more on their bills compared to direct debit customers.
The regulator will also be "monitoring levels of additional credit provided by suppliers" this year.
Neil Kenward added: “This type of credit helps some of the most vulnerable PPM customers, by providing them with additional respite, when they are struggling the most, and prevents them from going off supply.
"Many of these customers may have already exhausted alternative options, such as emergency or friendly hours credit, so additional credit can be critical to avoiding self-disconnection.