Ofgem warns suppliers over forcible prepayment meter installations
Press release
- Publication date
- Industry sector
- Supply and Retail Market
- Suppliers installed 84,000 prepayment meters under warrant to recover customers’ debt last year led by British Gas, Ovo Energy and Utility Warehouse
- Suppliers supposed to put indebted customers on repayment plans first and only use warrants as a last resort
- But progress as disconnections for debt in Great Britain fell to almost zero last year
Suppliers must only install prepayment meters by force to recover debt as a last resort, Ofgem has warned, as research shows some suppliers are using such tactics too often.1
Ofgem has published its annual report on how suppliers treat their customers in vulnerable situations, including those in debt and at risk of being disconnected.2
Last year the total number of prepayment meters installed under warrant granted by a court to recover customer debt rose from 81,000 to 84,000 compared to 2016. This works out at an increase of 6.9% (42,283) and 2.41% (42,037) for gas and electricity prepayment meters respectively.
Three suppliers forcibly installed a much higher proportion of meters per head for their newly indebted customers than the industry average - Utility Warehouse (around five times more), British Gas (around double the industry average) and Ovo Energy (around a third more).3, 4 Whilst Utility Warehouse and Ovo Energy have improved their performance since 2016, installing fewer meters under warrant, their use is still high.
This month Ofgem launched an investigation into how Utility Warehouse manages indebted customers, including whether it is installing prepayment meters under warrant appropriately as a means of recovering debt.
Under Ofgem’s rules, suppliers must identify customers who are in or at risk of debt, and engage with them early to put them on manageable repayment plans. Prepayment meters must only be installed by force in a customer’s home using a warrant obtained by a court order as a last resort.
This year, Ofgem banned forcible installations for the most vulnerable and capped charges at £150, and expects such installations amongst all suppliers to come down next year.
Ofgem is also concerned that too many customers who owe money do not get the support they need from suppliers to help pay debt back. This is particularly the case for some smaller and medium suppliers, who on average have only 25% of their electricity customers who owe money because they are in debt or arrears on a manageable repayment plan, compared to 58% for larger suppliers.
Co-operative Energy and Solarplicity (formerly LoCO2) had the lowest proportion of electricity customers who owe money on repayment plans - only 11% and 4% respectively - compared to the national average of 52%, according to Ofgem’s report.
Suppliers are doing more to help other vulnerable customers. The number of disconnections for debt fell to an all-time low, dropping from 210 in 2016 to just 17 last year. This continues a long-term downward trend from a peak of 8,300 annual disconnections a decade ago, following a crackdown by Ofgem.
A record 6 million vulnerable electricity consumers and nearly 4.8 million gas consumers are now registered on their supplier’s priority services register, which allows them to get additional support services such as quarterly meter reads, to help them manage their energy day to day. This is an increase of 36% for electricity customers and 30% for gas on 2016.
Some suppliers could do much more to ensure their eligible customers can access these services, particularly First Utility which only has 1.9% of its electricity customers on its priority service register compared to the industry average of 22%.5
Ofgem is working with these suppliers to make sure they improve the way they treat vulnerable customers and will take tough action if they fail to do so.
Rob Salter-Church, interim executive director of consumers and markets at Ofgem, said:
“We’re pleased that suppliers have almost stopped disconnecting customers who struggle to pay bills, but they could do much more.
“Some suppliers are very frequently using force to recover debt. Instead, they need to identify struggling customers and support them in paying money back as our rules require. Installing meters under warrant to recover debt must be an absolute last resort.
“Protecting vulnerable customers is a non-negotiable for suppliers. We expect all suppliers to reach out to these customers and respond to their needs, not exacerbate their difficulties. If they fail, we will take tough action.”
Notes to editors
1. Suppliers can apply to the court and install a prepayment meter under warrant when customers fall into debt. Our guidance is clear this should be a last resort, and that suppliers should proactively engage with customers to offer them other manageable repayment options first. Ofgem has also banned forcible installations for the most vulnerable and capped charges at £150, so expects warrant installations amongst all suppliers to come down next year.
2. Ofgem’s report Vulnerable consumers in the energy market 2018, along with its Annual social obligations data report, give an annual overview of suppliers’ performance on vulnerability, analysing performance on debt, disconnections, prepayment meter installations (including using warrant), and on the non-financial services they offer customers under the priority service register.
3.
4. *Newly indebted customers means customers entering into a debt repayment arrangement during 2017
5. Following our rule-change last year, suppliers must now act to identify vulnerable customers and offer them free day-to-day services to help them manage their energy through their ‘Priority Service Register’.
6. Read more about Ofgem’s work on vulnerability in today’s blog.
Further information
For media, contact:
Tim Webb: 0207 901 7179
Media out of hours mobile: 07766 511470 (media calls only)
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