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Households left without energy for weeks after sly prepayment meter switch

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10/11/2022
Energy customers have been automatically switched to prepayment meters without their permission which has led to some being left without power for weeks, the regulator has revealed.

Ofgem said it has become aware of “possible failings” in how energy suppliers treat vulnerable smart meter customers.

It said some customers have been automatically switched to prepayment meters without their permission and without suppliers having “full regard” to a billpayer’s situation.

“In extreme cases, the reports we’ve received suggest this has led to some vulnerable customers being left without power for days or even weeks.

“This is completely unacceptable, especially as we head into a very challenging winter,” Ofgem said.

The regulator confirmed it had written to suppliers to tell them to urgently look into this issue, to remind them of their obligations and to make it clear they must have effective checks and balances in place when switching the mode of a smart meter.

In the letter, Neil Lawrence, director of retail at Ofgem, wrote: “Recently, I have been made aware of what appear to be serious failings regarding how suppliers treat vulnerable smart meter consumers. Specifically, that smart meters operating in credit mode have been switched to prepayment without full regard to the licence conditions, leading to serious detriment to these consumers.

“Most worryingly, some vulnerable consumers have been left off supply. The cases shared are so concerning, and placed consumers at such risk, that we need to write to you to make you aware of the situation and remind you of your obligations.”

How and when can suppliers switch customers to prepayment meters?

There are old-style prepayment meters, which need to be installed, or if you have a smart meter it can be switched to ‘prepayment’ mode.

Ofgem confirmed it has seen evidence of suppliers remotely switching customers without the billpayer’s permission so they are therefore not following industry rules.

Providers must follow rules set out by regulator Ofgem and the government when moving someone to a prepayment meter.

If the household is in debt to a supplier, or you’ve told a provider you’re going to have difficulty paying a bill, you must be given options and you should also receive advice about how to use less energy and cut your costs.

The rules also state energy suppliers aren’t allowed to change households to prepayment meters if it wouldn’t be safe or practical to do so. See YourMoney.com’s Moving to an energy prepayment meter: Everything you need to know for more information on switching.

Difference in cost for prepayment meter customers

With prepayment meters, you pay for your energy in advance, either online or by topping up in certain shops.

They are typically more expensive than standard credit meters and tend to be installed in households in debt.

Around four million households are on a prepayment meters, but this number is estimated to grow as the cost-of-living crisis drags on into winter.

It is predicted that those on prepayment meters will spend £258 more on their energy bills this winter, compared to someone with a standard meter paying via direct debit, according to data from Citizens Advice. It also costs around £50 a year more for a prepayment meter in standing charges when compared to a standard meter, according to Uswitch data.

Collectively, prepayment meter customers will spend more than £1bn on energy when compared to those paying by direct debit.

An Ofgem spokesperson, added: “Through a number of market compliance reviews, we are also looking more widely at how suppliers support vulnerable customers overall, such as those with disabilities, and that includes how people are treated when they are switched to pre-payment meters.

“The results of this will be published soon, with ratings for each supplier. We expect improvement plans to be delivered at speed and won’t hesitate to take punitive action where needed. Standards of service across the industry need to improve.”

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