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The practice of energy companies of forcing households to pay more expensive prepayment meters when they struggle with bills has been condemned as ‘not acceptable’ by energy watchdog Ofgem and company and energy secretary Grant Shapps.
Today Jonathan Brearley, CEO of Ofgem, said he was ‘concerned’ about the increasing number of prepayment meters being installed by energy companies, regardless of customers’ wishes, and threatened legal action if vulnerable customers were harmed.
Brearley said: ‘I am concerned about the surge of households struggling to pay their bills, being switched to prepayment meters, sometimes without their knowledge, leaving them without heating.
He continues: “The number of forced installation of prepayment meters is extremely high. It is simply not acceptable for vulnerable customers to be left in the dark and cold in winter.’
Energy companies can even exchange smart meters for prepayment at the touch of a button
Yesterday, Grant Shapps, secretary of business and energy, wrote a letter to energy companies urging them to stop installing prepayment meters as so many households struggle to meet living expenses.
Here’s everything you need to know about why utility companies provide customers with prepayment meters – and your rights if it happens to you.
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Why do energy companies install prepayment meters?
Currently, there are more than three million households with prepayment meters and that number is growing rapidly.
That’s because energy companies force some customers to buy these meters, for which you have to pay in advance for the energy you use.
Energy companies do this because households are behind on their energy bills.
Another reason why the number of prepayment meters is growing is that some households are asking them to help them limit their energy bills.
In many cases, a smart meter can be remotely converted to prepayment without a visit from employees of the energy company.
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More expensive: Customers with prepayment meters normally pay higher prices for gas and electricity
What’s the problem with prepayment meters?
Simply put, vulnerable and poor households may end up paying more for energy and risk not being able to afford power when they need it most.
Customers with prepayment meters pay more for their energy than customers without, because prepayment meters are more expensive for energy companies to operate. This cost is passed on in the form of more expensive rates.
If a customer can’t afford to top up their meter, they won’t get any power at all. Charity Citizens Advice said 3.2 million households ran out of credit last year.
In addition, some energy companies have been accused of being underhanded in installing prepayment meters.
Ofgem’s Brearley said a man went on holiday in Glasgow and returned home to find he had switched to a prepayment meter without his knowledge – and had no way to top up.
Your rights around prepayment meters
Power companies have the right to enter your home and install a prepayment meter, but they must prove it is necessary and it must be a last resort.
The same applies to those who have a smart meter work as a prepayment meter.
However, Ofgem’s rules say that energy companies must check that a household is not vulnerable before switching prepayment, and explain any additional help available.
For example, a supplier cannot install a prepayment meter if it is not secure, or if you would suffer disability or illness if your energy were cut off for non-payment.
Energy companies also cannot place Prepayment meters if you cannot top up the device, for example because you do not live near a store where you can do so.
If you are in debt to your energy supplier, they must give you 28 days’ notice before installing a prepayment meter.
Can a power company break into my house to install a prepayment meter?
No, they can only enter peacefully. They need your permission to enter and perform the work, or go to a magistrates court to get permission.
However, if they go to court, they can add the cost of getting this warrant to the debt you owe them.
They must also provide at least seven days’ notice before placing a prepayment meter.
Can I decline a prepayment meter?
No, if you are in debt with utility bills. Power companies have the legal right to install these devices, and even Ofgem can’t stop them.
However, if you think that your supplier is not allowed to install a prepayment meter in your home, you can file a complaint.
Millions of people are left behind in cold, dark and damp homes because they cannot afford to charge their meters. No one should be forced to live like this
Gillian Cooper, Citizen Advice
You can do this by first talking to your supplier and filing a formal complaint. If you don’t hear anything within eight weeks, or it’s been eight weeks since they made a final decision, you can go to the Energy Ombudsman to submit another complaint.
This is a free process and the Ombudsman acts as an independent reviewer.
Gillian Cooper, head of energy policy at Citizens Advice, said: ‘We welcome the government’s call for energy suppliers to stop forcing people to use prepayment meters.
“Millions of people are left behind in cold, dark and damp homes because they can’t afford to top up their meters. No one should be forced to live like this.
It is now up to suppliers to do the right thing and put an end to this practice. If they don’t, the government needs to act more forcefully. It is also vital that further protection is provided for people already using prepayment meters.”
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