Installation of pre-payment meters (PPMs) represents disconnection by the backdoor, and transfer of a smart meter to a PPM setting is likely to present an underhand way of disconnecting people in fuel poverty.
If PPM customers do not have money to top-up their meter, eventually, they will run out of gas or electricity and self-disconnect. And to make matters worse, PPM users generally still pay daily standing charge costs even if they have fallen into debt and self-disconnected from their supply. This makes it increasingly difficult for them to get back on supply as they are often made to pay off accrued debt before they can access their heating and power. [1]
Disconnection leaves people at an even higher risk of the very worst effects of living in a cold damp home this winter. These include causing or worsening respiratory conditions, cardiovascular diseases, mental health, dementia and hypothermia and slower recovery from injury. [2]
So while energy firms’ licence conditions should protect many vulnerable people from formal disconnection, customers in debt who are forced onto a PPM by their supplier will often “self-disconnect.” [3]
To make matters worse, campaigners found that magistrates courts were “rubber stamping” warrants to force people onto PPMs if they were in debt to their energy firm. Freedom of information requests revealed 187,000 such applications were made by energy firms in the first six months of 2022 and 500,000 since the end of Covid lockdown. An investigation by Dean Kirby at the i Paper found some courts were approving 500 warrants in under four minutes. [4]
It has also been established that firms are inappropriately switching smart meters from credit to pre-payment mode, thereby forcibly installing PPMs remotely. [5]
While some customers do prefer to pay via pre-payment, research by an energy firm indicates that as many as 630,000 households could have been forced onto a PPM without their express consent. [6]
Ofgem recognised that this is a breach of licence conditions and have repeatedly written to energy firms urging them to stop this practice. [7]
However, the scandal continued…
- Throughout Kirby’s investigation for the i paper, energy firms assured campaigners, ministers, MPs and the media that these meters and forced transfers were not used on vulnerable customers.
- Energy UK, the industry trade body which represents firms including British Gas, Scottish Power and EDF Energy told the i paper that “suppliers face ‘difficult decisions’ in dealing with customers in debt on their bills and the warrants are a last resort after ‘exhausting all other options’ and after vulnerability checks are carried out.”
- However, The Times investigation into British Gas’ use of PPMs proved this was not the case.
- This led Ofgem to impose an energy-firm backed voluntary ban on the forced transfer of households onto PPMs and the Chief Justice to impose a ban on magistrates issuing court warrants to install PPMs.
Despite the public and political outcry, we still need action
- Despite the current ban being put in place by Ofgem and the Chief Justice, there are now reports of energy firms using the threat of a court order imposed PPM to intimidate households.
- Energy firms have also been granted over 13,000 warrants for entry since the voluntary ban came in, with the i paper reporting that the Ministry of Justice “does not know” why these warrants were issued.
- Energy firms have recently signed up to a new voluntary code of conduct, designed to govern the forced installation of prepayment meters.
- Ofgem expects this Code will form part of licence conditions and will be introduced from 1 October 2023, at the worst possible moment as the next winter looms large in peoples’ minds.
- But the guidelines do not go far enough, failing to protect highly vulnerable groups and failing to help tackle rising energy debt.
- At present, the code is voluntary which undermines its objective. Even after becoming part of licence conditions, energy firms that breach the code will only face a sanction of a fine. This will not be a deterrent.
- We are therefore calling for the Secretary of State to be given the powers to intervene and introduce an all-out ban on the forced transfer to pre-payment meters. The proposed ban will not affect the voluntary installation of PPMs by customer request.
- Amendments to the Energy Bill to bring in a ban have been proposed by MPs and are backed by the public, with around three-quarters in favour of a legal ban.
What next?
- Even a ban will not solve the injustices we see in the energy market.
- The Government’s plans to end the prepayment meter premium paid by these customers will not end the discrepancy for all customers. By correcting the unfairness via the unit cost (when some inequity occurs in the standing charge) people who use below the “average household” consumption of energy will not be compensated in full, while those who use more energy than the “average household” will be overcompensated. Ofgem must address varying costs of energy via the price cap mechanism and standing charge reform.
- End Fuel Poverty Coalition members have concerns about how PPMs are being “sold” to consumers and will call for Ofgem to review this, should the current Market Compliance Review into PPMs not identify this as an issue.
- Government, Ofgem, suppliers and consumer groups / charities must be convened to discuss how to address the issue of record levels of consumer energy debt.
- We need to see a wider definition of vulnerability in the energy market adopted. End Fuel Poverty Coalition members believe vulnerability should be defined as a household where there is someone present who:
- Is medically dependent on powered medical equipment in order to stay healthy at home (e.g. dialysis machines, oxygen concentrators, use artificial ventilators) or rely on energy to power equipment (e.g. charge wheelchairs, run fridges for medicines)
- Has a respiratory disease
- Has a cardiovascular disease
- Suffers from mental ill health
- Has Sickle Cell Disease
- Has issues with nutrition, or may be at risk from poor nutrition caused by not being able to use energy (e.g. if a young child is present in the household)
- Is young or a school age child
- Could otherwise be considered elderly or disabled
- Could otherwise be considered financially vulnerable and at risk of “self disconnection”
- This definition of vulnerability should be included in a new Priority Services Register (as recommended by Ofgem) and form the basis of eligibility for a social tariff or Basic Energy Guarantee.
Customers can contact Citizens Advice or other representative organisations to challenge installations.
Notes
[1] NEA, 2021. Fuel Poverty Monitor. National Energy Action. [Online]. Available at: https://www.nea.org.uk/wp-content/uploads/2021/11/0000_NEA_Fuel-Poverty-Report-and-Exec-Summary_v2.pdf. [Accessed 28/10/22]. Pg37.
[2] Full details and sources at https://www.endfuelpoverty.org.uk/about-fuel-poverty/
[3] Citizens Advice, 2022. Out of the cold? Helping people on pre-payment meters stay connected this winter. Citizens Advice. [Online]. Available at: https://www.citizensadvice.org.uk/Global/CitizensAdvice/Energy/EXTERNAL_%20For%20publication_Out%20of%20the%20cold_%20Helping%20prepayment%20customers%20to%20stay%20connected%20this%20winter.pdf. [Accessed 28/10/2022]. Pg3.
[4] Examples of “rubber stamping” such applications go back as far as 2013 at least: https://thejusticeofthepeaceblog.blogspot.com/2019/11/everyday-injustice-at-magistrates-courts.html [Accessed 25/11/2022]
187,000 figure: https://www.bigissue.com/news/social-justice/energy-companies-court-warrant-prepayment-meter-cost-of-living/ [Accessed 25/11/2022]
500,000 figure / 500, 4 minutes figure: https://inews.co.uk/news/uk-energy-debt-crisis-half-million-warrants-granted-forced-prepayment-meters-2008884 [Accessed 12/01/23]
[5] https://www.citizensadvice.org.uk/Global/CitizensAdvice/Energy/EXTERNAL_%20For%20publication_Out%20of%20the%20cold_%20Helping%20prepayment%20customers%20to%20stay%20connected%20this%20winter.pdf. [Accessed 28/10/2022]. Pg4.
https://www.bbc.com/news/business-63554879 [9/11/22]
[6] Research by Utilita, reported in The Sun, indicates that while 86% did choose to be on a PPM, as many as 14% of the 4.5m PPM households (i.e. 630,000 households) did not choose to be on the tariffs which could cost them in excess of £200 more this winter.
[7] Standard licence conditions (SLC) 27 and 28. While suppliers are mandated to check that a PPM is safe and reasonably practicable before installation, End Fuel Poverty Coalition members have heard reports of older and vulnerable people being forced onto a PPM or having their smart meter switched to PPM mode without due regard to their safety. Letters from Ofgem, e.g. November 2022 and September 2022.