The energy regulator has announced that the halt of forced prepayment meter installations by suppliers will last for the next six weeks.
Early this month, it came to light that debt agents for British Gas had broken into the homes of the most vulnerable customers to install meters by force.
Since then, Ofgem has said that they will no longer engage in this practice and that this suspension will continue until the end of March.
According to the authority, all domestic vendors had already committed.
On Wednesday, Ofgem sent a letter to suppliers announcing a consultation on whether or not businesses should be required to use prepayment meters and whether or not the laws should be altered.
All prepayment meter remote transfers must be halted for six weeks.
On Thursday, February 21st, it will release new information regarding the prepayment meter warrant installation process and the remote mode switching phases of its Market Compliance Review.
After news leaked that British Gas agents had broken into the homes of the vulnerable to install meters, the energy companies stopped doing so.
Chris O’Shea, CEO of Centrica, the company that owns British Gas, said to the BBC after the report appeared in The Times, “It is utterly unacceptable.”
As stated by Ofgem, “the energy crisis is no excuse for unethical behavior toward any customer,” especially those in vulnerable situations.
It requested that providers halt new installations and reconsider their policy of using court warrants to access the residences of clients behind on payments.
For the time being, British Gas has said it will not be mandating the installation of prepayment meters. The memo sent out on Wednesday confirms that the hiatus will continue into the spring.
According to the letter, last week, during a meeting, Ofgem asked providers to stop performing forced installations.
For clarity, it was stated that “no further petitions to court for installation warrants would be made until the theft is suspected. This includes ending installation by the warrant, ceasing the remote mode switch of smart meters to pre-payment without explicit authorization from the client.”
According to Ofgem’s report, some suppliers have expressed concern that uncollectable debts may increase if prepayment meters cannot be installed.
Suppliers warned that this would drive up their costs and ultimately affect the prices they charge everyone else.
The agency has pledged to “identify what action we need to take” by investigating the link between consumer debts and supplier prices.
Guidelines for meters that need prepayment
More than four million homes in the United Kingdom utilize prepayment meters. Existing regulations mandate:
- Prepaid energy is purchased in advance by the customer through an account or a top-up card. Money can be borrowed in an emergency.
- The suppliers’ overhead processing these transactions makes the price per kilowatt-hour greater than direct debit. When indebted to a vendor, it’s often the last resort.
- Some clients who don’t pay their bills on time can be switched to prepayment, either electronically through a smart meter or physically, by the force of a court warrant.
- Before installing a prepayment meter, providers must have explored all alternative options and should not target clients who are particularly vulnerable, such as the elderly or families with young children.
Ofgem plans to meet with energy providers, consumer groups, and charitable organizations to reevaluate the rules and guidance for pre-payment meter use, both now and in the future, given “the current unusual circumstances.” This may result in changes to the rules and recommendations.
Findings from Centrica
Centrica, the parent company of British Gas, is releasing its annual results on Thursday. The company is projected to report record profits of over £3bn, which is more than three times the £948m profit Centrica made in 2021.
Before gas prices shot up in response to Russia‘s invasion of Ukraine, it was possible that the energy industry would face new allegations of profiteering.
Chris O’Shea, the CEO, could receive a bonus of £1.6m on top of his base salary of £795,000.
British Gas is the largest energy provider in the United Kingdom, with over 10 million customers.
On Friday, the French government-owned competitor EDF will reveal its financial results for 2022. It provides power to almost five million properties in the United Kingdom.
