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British Gas asked to explain prepayment meter changes

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British Gas has been asked to explain its rationale for switching a prepayment meter provider and increasing the minimum top-up value, following concerns the changes may have resulted in customer harm.

Energy regulator Ofgem has opened a ‘compliance case’ into the way British Gas handled changes for its prepayment meter customers, including switching provider and upping the minimum top-up value.

Ofgem said it was concerned by reports of poor customer experience following the changes in recent months.

British Gas ditched its relationship with PayPoint in December 2019, meaning customers would no longer be able to top-up at their usual newsagent or supermarket. Instead from 1 January, they needed to visit a Post Office to top-up via PayZone.

The energy giant then announced the minimum top-up would increase from £1 to £5, also from 1 January 2020. However, in February it made a u-turn on the decision, returning to the minimum £1 top-up value as it “continued to review the needs of its prepayment meter customers”.

With a prepayment, or pay-as-you-go tariff, you pay for your energy before you use it – usually by adding money to a key or smart card, which is then inserted into the meter. These tariffs tend to be a much more expensive way to pay for energy than pay monthly tariffs paid via direct debit.

Ofgem said that while it is taking compliance action over British Gas’ handling of these changes, it isn’t implying any wrongdoing. But when significant operational changes that could impact its customers are made, it is vital that appropriate steps are taken to manage risks, particularly where vulnerable customers are involved.

As such, British Gas has been asked to explain its decisions and analysis of the impact these actions would have on customers. Ofgem will then assess whether it took appropriate steps to identify and manage key risks.

The letter states: “Ofgem has strong rules in place requiring suppliers to treat customers fairly and to have particular regard to vulnerable customers. This includes how suppliers communicate with customers. Ofgem also has clear guidance on the steps a supplier must take to ensure it is safe and practicable in all circumstances for a customer to use a PPM. We will continue to closely monitor the experiences of PPM customers and engage with suppliers where we have concerns with their approach.”

A British Gas spokesperson said: “We are fully co-operating with Ofgem on this compliance case. After listening to feedback, we made the decision to reverse the change to our minimum top-up and move it back to £1. The aim of the increased minimum top-up was to keep our costs down in order to offer our customers the best value, however we are happy to change this decision and continue to look at ways that we can help our most vulnerable customers.

“It is vital that our prepayment customers are able to access this important service. Ultimately, we intend that more of our customers will be closer to a top-up point as Payzone has committed to adding new locations where we find a customer need – especially in rural areas.”

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