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Author: Lauren Howells
There will be a £150 cap on charges for installing a prepayment meter for “indebted” gas and electricity customers, Ofgem has announced.
Customers in debt can be forced to have a prepayment meter installed
Customers in debt with their energy supplier can be forced to have a prepayment meter installed in their homes, which the regulator says at the moment can result in a charge of anywhere up to £900, as suppliers are able to charge costs back to the customer.
This happens when energy providers apply to a court in order to install a prepayment meter under warrant when a customer is not paying their energy bills. Customers sometimes have to pay these costs, which could push them further into debt.
Ofgem says these measures are to protect consumers from “unnecessary hardship”
The regulator says that it has brought about these measures “to protect consumers from unnecessary hardship due to having a prepayment meter installed under warrant”.
Ofgem says that these measures will also stop suppliers from levying any prepayment meter warrant charges and “banning installations entirely” for the most vulnerable customers. Charges, for example, could be prohibited for those who are in severe financial difficulty. If the experience of having a prepayment meter installed for a customer could be “severely traumatic” because of, for example, mental health issues, the installation could be stopped altogether.
These new measures will take effect from January 2018.
Customers face a “double blow” when hit with high warrant charges
Ofgem’s senior partner for consumers and competition, Rachel Fletcher, said: “Protecting vulnerable customers is a priority for Ofgem. At the moment vulnerable customers face a double blow when they’re hit with high warrant charges on top of existing debt – risking making their situations worse”.
“The measures will protect all consumers, including the most vulnerable, from experiencing unnecessary hardship due to having a meter installed under warrant. We want to send a strong message to suppliers that using a warrant to install a PPM is a last resort. They must step in early to help customers manage debt through repayment plans”.
“Suppliers are continuing to actively use warrants for customers who get into debt”
Ofgem says that there has been a reduction in the number of prepayment meters installed for debt and the number installed under warrant since since 2013 but that “the number of warrants has not been decreasing as rapidly as the number of customers in debt, which shows that suppliers are continuing to actively use warrants for customers who get into debt”. It says that in many cases, some suppliers waive charges.
Safeguard tariff to protect customers on prepayment meters
The regulator also introduced a safeguard tariff in April this year, to protect customers on prepayment meters from overpaying for their energy.
Back in October, Ofgem announced that it was extending its prepayment safeguard tariff to around 1 million more vulnerable households this winter, saving them on average £120 a year.
Ofgem has said that it has plans to extend this safeguard tariff to another 2 million vulnerable customers next winter “depending on the timing of the Government’s cap on standard default tariffs”.