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Energy UK responds to Ofgem’s announcement on prepayment installations

Responding to Ofgem’s announcement on prepayment installations, Dhara Vyas, Energy UK’s Deputy Chief Executive said:  
“Ofgem giving the go-ahead for some suppliers to restart involuntary PPM installations follows a year-long voluntary pause during which time a new Code of Practice has been adopted and agreed between suppliers and the regulator. This has strengthened the safeguards for customers and detailed the process that suppliers must follow before any installation – including making repeated attempts to contact the customer first and carrying out a site visit to ensure these only take place where it safe to do so.        
“Those suppliers restarting have also had to meet stringent conditions from Ofgem such as reviewing previous installations and addressing any resulting issues – while suppliers have also signed up to voluntary commitments to go further in helping households struggling with energy bill debt this winter.  
“Suppliers have a responsibility to try and prevent customers falling further into arrears – as well as limiting the build-up of bad debt overall which amidst a wider cost-of-living crisis is at a record high of £3 billion and is ultimately recouped from all customer bills.
“Involuntary installations are a last – but necessary – resort for cases where repeated attempts to address debt with the customer through other means have been unsuccessful. If customers are struggling with debt, we would urge them to discuss it with their supplier so that they can see what help is on offer.    
“While the new Code of Practice will address the concerns that led to the halt in installations, the new and extended exempt categories and the pause itself mean that customer debt will inevitably increase. It underlines the need for the Government to put in place targeted support for those customers most in need to help make bills more affordable and stop the build-up of debt in the first place.”  
Key facts

  • Prepayment meters (PPMs) help customers monitor and budget their energy usage. Much like a pay-as-you-go mobile phone contract, PPMs mean that customers pay for energy as they use it, instead of building up credit or paying quarterly, which helps reduce the chance of debt build-up.
  • Whilst many PPM customers prefer this way to pay, in cases where there is already a high build up of debt it may be necessary to install a PPM in a household under warrant, known as an involuntary PPM.
  • Involuntary PPMs play an important role in enabling suppliers to meet their responsibility to try and prevent customers from falling further into arrears – as well as limiting the build-up of bad debt overall, which is at a record high and ultimately recouped from all customer bills. Without this tool, all paying customers would end up footing the bill for the resulting bad debt on a minority of customer bills.
  • Installing involuntary PPMs is a last resort and suppliers will only be allowed to restart installations  when they can satisfy Ofgem’s restart conditions.
  • In April 2023, energy suppliers signed up to a new Code of Practice developed by Energy UK, Ofgem and the Government, which is now mandatory.
  • These new rules mean that customers are now better protected than ever. Ofgem will be monitoring individual suppliers to ensure that the tests to protect customers are met.
  • For the most vulnerable, the new rules go even further and mean that those who are at risk of going off supply will be able to request and receive credit from their supplier.
  • Energy UK also worked with its members, Citizens Advice and Ofgem to create The Winter 2023 Voluntary Debt Commitment. This sets out additional actions that energy suppliers will take, above regulatory obligations, to support customers with payment difficulty.
  • Despite this extra support, debt is still rising unsustainably across the energy sector which impacts all customers.
  • There is a wider affordability crisis in the economy, and many customers will continue to struggle to afford their energy bills. The Government must urgently look into an enduring solution for support targeting the most vulnerable households.

More information about Prepayment Meters: