Thousands of energy customers are set to receive payouts of up to £1,000 each, and could see debts written off, in response to the scandal over the forced fitting of prepayment meters.
Thousands of Tens of thousands are set to receive payouts of up to £1,000 each, and could see debts written off, in response to the scandal over the forced fitting of prepayment meters.
The Root of the Problem
The scandal erupted two years ago, at the peak of the cost of living crisis, with energy prices spiking after ‘Russia’s invasion of Ukraine’ . It emerged that energy firms were switching people who were struggling to pay their bills onto prepayment methods, either by remotely changing their smart meter to prepay mode, or by entering the property to install a new meter.
A prepayment meter is a type of electricity meter that requires payment before consumption.
It's commonly used in developing countries or areas with low electricity access.
However, controversy surrounds prepayment meters due to issues like overcharging, inaccurate readings, and power disconnections.
In some cases, these meters have led to social and economic hardship, particularly among vulnerable populations.
According to a 2020 report, an estimated 40% of households in sub-Saharan Africa rely on prepaid meters, 'prepayment meters'
Forced installations have been widely condemned, with some customers being forced into their homes and charged for police and locksmiths. The practice has been particularly egregious when it comes to vulnerable customers who were already struggling to pay their bills.
The Response
Energy companies are paying out more than £70m in compensation and financial support to customers. Eligible customers could receive payments starting at £40, rising to £250 or £500, depending on the way they were treated by their energy supplier, or where processes were not followed adequately.
The £1,000 payments were for customers who had faced ‘inappropriate installation’ , Ofgem said. Some may already have received help, or have been contacted by their energy supplier. If not, customers did not need to take any action, as compensation would be paid directly into customer accounts.
Inappropriate installation refers to the incorrect or unsafe manner of installing a product, system, or device.
This can lead to damage, malfunction, or even safety hazards.
Common causes include inadequate preparation, insufficient training, or disregard for manufacturer guidelines.
Statistics show that up to 75% of installation-related errors are due to human error.
To avoid inappropriately installed products, it's essential to follow manufacturer instructions and seek professional help when necessary.
Ofgem’s director general of markets, Tim Jarvis, has stated that the regulator’s priority was to ‘put things right for those who weren’t treated properly, and ensure we don’t see bad practice repeated’ . The new code of practice now in place includes stricter conditions that companies must meet if they want to install prepayment meters without customer consent.
Ofgem, the UK's energy regulator, responds to changes in the energy market through various measures.
These include price controls, licence modifications, and enforcement actions against non-compliant suppliers.
In 2021, Ofgem introduced a price cap to limit household energy bills.
The regulator also monitors supplier performance and takes action when necessary.
Additionally, Ofgem engages with industry stakeholders to ensure the market operates fairly and efficiently.
Personal Stories
Aaron King, 54, from Kent, is one of those who say their energy company forcefully entered their home to fit a meter. He had lost his job and was £160 in debt for gas and electric. ‘They [the energy company] had gone in and fitted prepayment meters, taking police and locksmiths with them,’ he said.
Jennifer Hicks, 72, from Langley in Berkshire said she had a forced meter change while she was out shopping about 18 months ago. She had no notice of it and was surprised to find that things were moved in her home and not moved back.
Christine Harries, 36, from Norwich said she was forced onto a prepayment meter and told to pay back £44 a month to her energy company for her debt but that the firm refused to send her an itemised bill showing what she owed.
