Responding to Ofgem’s announcement on the Code of Practice for involuntary installation of prepayment meters, Dhara Vyas, Energy UK’s Deputy Chief Executive, said:
“The inclusion of the Code of Practice in suppliers’ licences confirms that involuntary PPM installations will be done as a last resort, with the proper consideration and support, and only in circumstances where it is safe to do so.
“Such installations will still play an important role in enabling suppliers to meet their responsibility to try and prevent customers falling further into arrears – as well as limiting the build-up of bad debt overall, which is ultimately recouped from all customer bills.
“Ofgem has previously acknowledged that the new process will result in fewer installations and an increase in consumer debt – in addition to that built up during the current pause. The extension of the exempt categories is likely to further increase the level of bad debt. It underlines the urgency of tackling the growing affordability crisis and the importance of stopping debts building up in the first instance.
“This winter is going to be very difficult for millions of energy customers. We continue to urge the Government to introduce targeted support for this winter and to press ahead with developing long-term targeted financial support – such as a social tariff – for those customers most in need, as well as improving the energy efficiency of as many homes as possible to cut bills permanently.”
Notes to Editors
In April, Ofgem published a new Code of Practice, agreed between Ofgem and all British energy suppliers, which set out clear guidelines to further protect vulnerable customers when making involuntary installations of prepayment meters. At the start of the year, all suppliers had voluntarily paused prepayment meter installations carried out under warrant in order to review their own practices and since then, the energy industry has worked closely with Ofgem to develop this Code of Practice as well as on the regulator’s own review. Bad debt (ie arrears which are not paid back) is ultimately recouped from all customer bills, disproportionately impacting low-income households. In January 2023, Ofgem said that – following the biggest rise in over a decade – energy debt stood at £2.5 billion. The new Code brings clarity and consistency to the process and assessments that should be carried out by all suppliers – before, during and after any involuntary switch to prepayment meter – especially in relation to identifying when any installation may not be safe for vulnerable customers. Before resuming any involuntary installations, suppliers must demonstrate they have processes in place to ensure adherence to the Code, as well as presenting a plan to Ofgem on redress for customers that may have wrongfully had prepayment meters installed.