Ofgem warns energy suppliers to help struggling customers or face penalties

The UK power regulator Ofgem is to research suppliers forcibly switching weak prospects to prepayment meters.

Jonathan Brearley, chief govt of Ofgem, mentioned on Monday that the regulator didn’t have authorized powers to utterly ban pressured installations of prepayment meters however it might study firms’ “checks and balances” and act towards those that “don’t take due care”.

Most prospects pay for his or her energy after use however power suppliers can power folks on to costlier pay as you go meters after they fall behind with common funds.

The quantity of people that have been moved on to prepayment tariffs has risen sharply as they grapple with hovering power payments and the value of residing disaster.

Brearley’s feedback got here after Grant Shapps, the enterprise secretary, advised suppliers over the weekend that they need to voluntarily finish the observe of switching households to prepayment metres or face being “named and shamed”.

Talking at an occasion held by the Institute of Authorities think-tank, Brearley additionally referred to as for a “severe evaluation” of a less expensive social tariff for low-income households, which might imply these which can be least capable of pay are charged a cheaper price for his or her energy.

Present guidelines require suppliers to discover the monetary assist on provide or perform applicable assessments earlier than they will forcibly set up prepayment meters or remotely swap a family’s good meter to a pre-pay tariff.

However Brearley mentioned some folks had been being moved “with out even figuring out about it”. He cited an instance of a buyer in Glasgow who “left to go on vacation and returned to seek out he’d been switched to pre-pay with out his information and had no method to prime up”.

“Though there may be good observe in lots of locations, no firm got here via [in initial investigations] with no need to enhance and all have been required to submit plans to satisfy the requirements we set,” Brearley mentioned.

The federal government has launched an power value assure scheme aimed toward limiting a typical family invoice to about £2,500 a yr till the tip March, and to round £3,000 till spring 2024.

Though wholesale fuel costs have been falling, Brearley mentioned it was unlikely that costs would return to pre-pandemic ranges and that new approaches had been wanted in Britain’s power sector.

Shapps has written to power suppliers telling them they aren’t doing sufficient to assist weak households and must be providing credit score or debt recommendation, with pre-pay installations a final resort.

Residents Recommendation, the patron foyer group, mentioned final month that 3.2mn folks throughout the UK ran out of credit score on their prepayment meter final yr as a result of they might not afford to prime up.

One in 5 prepayment meter prospects final yr spent a minimum of 24 hours with out fuel or electrical energy, leaving them unable to show the heating on or prepare dinner a sizzling meal, the group discovered.

Power UK, which represents the trade, mentioned: “Suppliers are already required to have exhausted all different choices earlier than putting in a prepayment meter by warrant.

“Solely after repeated unsuccessful makes an attempt to contact the shopper to debate compensation choices and provide assist and after checks to make sure they don’t go forward when prospects are in probably the most weak conditions.”