Energy prepayment meters are described by those whose lives are blighted by them as “poverty traps”. Whether someone can afford to top up their meter will dictate whether they sleep in a warm home that night. Or cook a hot meal.
When a temporary ban on energy companies force-fitting the controversial devices was imposed in February, few railed against it. A Times investigation, which alleged that agents working for British Gas broke into vulnerable people’s homes using court warrants to fit the meters, was too shocking to ignore. In reality, though, consumer groups such as Citizens Advice and National Energy Action had long shouted about the hardships faced by pre-pay customers to little avail.
Energy regulator Ofgem had a rare chance to overhaul the rules on forced meter installations after the ban. But its updated “code of practice” published on Tuesday is an opportunity missed. The code’s voluntary nature still leaves too much power and judgment in the hands of energy suppliers.
The regulator should strive for an improved version to become legally binding as soon as possible. More widely, there needs to be a national conversation about whether prepayment meters should exist at all.
Suppliers insist that some households like the devices because paying in advance for electricity and gas can be useful for budgeting. But as energy prices soared following Russia’s invasion of Ukraine, it quickly became clear they were used by some companies to control debts.
Citizens Advice estimates the number of people moved on to prepayment meters reached 600,000 in 2022, up from 380,000 in 2021. Pre-pay meters lead to households self-disconnecting when they can’t afford to top up.
From an energy supplier’s perspective, there are multiple reasons for the recent proliferation. Energy retailing is a low-margin business. Household energy debt is rising at the highest rate in more than a decade, reaching £2.5bn in Britain.
Bad debt threatens to overwhelm an already fragile sector. Mechanisms exist to recover bad debts via Britain’s energy price cap, which dictates prices for most households. But this leaves all other customers to pay, leading to questions of fairness.
Before the recent scandal, Ofgem did have rules stipulating that pre-pay meters could not be fitted in the homes of people in “very vulnerable situations”. They were too woolly. “Nobody really knew what the rules were,” one supplier admitted.
In an attempt at clarity, Ofgem has entered into the risky business of defining vulnerability. A “high risk” category will be subject to a continued ban on forced installations. This includes the over-85s where there is no other support in the house, and households where someone has a severe health condition such as cancer.
People with other serious mental or physical health conditions, such as Alzheimer’s, schizophrenia or cerebral palsy, are only judged “medium risk”. They will require “further assessment” on a “case by case” basis by suppliers.
Many of these decisions appear arbitrary and are bizarre. The End Fuel Poverty Coalition rightly worries about how people will prove their physical or medical condition is severe enough to convince suppliers they should, too, be exempt. No doubt any such process would be stressful and humiliating.
Officials privately insist the categories are not exhaustive. If problems arise, categories can be tweaked before the rules become legally enforceable — a process Ofgem has promised to consult on, although it risks being lengthy.
Already, though, charities are calling for far bigger groups to be excluded, raising the question of why forced installations are allowed full stop.
“We don’t think any older person should be subjected to this treatment,” said Caroline Abrahams, charity director at Age UK. Equally, Scope, the disability charity, wants forced installation and the remote switching of newer, digital meters to pre-pay mode banned for all disabled people.
Ofgem’s chief executive Jonathan Brearley insists the regulator is already working with the government on longer-term answers to Britain’s energy affordability crisis, including possible social tariffs.
They shouldn’t delay. It’s only a matter of time until the next energy scandal comes along.
