Thousands to Receive Payouts Over Forced Prepayment Meter Fittings

The UK energy landscape has been rocked by a scandal that saw tens of thousands of vulnerable customers subjected to the forced installation of prepayment meters, a practice that left many struggling to afford essential energy. Now, a sweeping initiative is underway to deliver justice, with thousands of affected individuals set to receive compensation and debt write-offs totaling nearly £74 million. This significant development follows a rigorous review by Ofgem, the energy regulator, which uncovered widespread failings by suppliers in their treatment of customers, particularly those in precarious financial or health situations.
The scandal came to light in early 2023, revealing that energy companies were forcibly installing prepayment meters in homes, often by obtaining court warrants or remotely switching smart meters to prepayment mode. This practice, often targeting those already struggling with energy bills, led to significant distress and hardship, with reports of vulnerable individuals being left without heating or electricity. The public outcry and subsequent media investigations prompted Ofgem to halt forced installations and launch a comprehensive review into the period between January 1, 2022, and January 31, 2023.
As a direct result of this investigation, eight energy suppliers have committed to providing compensation and support. These companies include Scottish Power, EDF, E.ON, Octopus, Utility Warehouse, Good Energy, Tru Energy, and Ecotricity. While OVO has also confirmed it will pay compensation in line with Ofgem's guidelines, it's important to note that British Gas, Utilita, and other suppliers are still subject to ongoing enforcement investigations, potentially affecting tens of thousands more customers.
The compensation package is multi-faceted, aiming to address various levels of mistreatment. A total of £5.6 million will be paid directly in compensation to approximately 40,000 customers who experienced involuntary prepayment meter installations during the specified assessment period. This translates to an average payment of around £140 per customer. Furthermore, a substantial £13 million of energy debt will be written off for customers who had a prepayment meter involuntarily installed, providing much-needed financial relief. This comes on top of £55 million in financial support, including hardship payments and debt write-offs, already provided by suppliers to affected consumers prior to the completion of the review.
The individual payouts vary based on the severity of the mistreatment. Customers whose cases involved general process misalignments, data quality issues, or poor record keeping could receive payments starting at £40. More significant breaches, such as insufficient debt support or unfair customer treatment, are set to warrant payments of £250. For instances where a customer's vulnerability was not adequately considered, the compensation could rise to £500. The most egregious cases, those involving "inappropriate installation" of a prepayment meter, could see individuals receive up to £1,000.
Crucially, affected customers are generally not required to take any action to receive their compensation. Energy suppliers are tasked with identifying eligible individuals and will either credit payments directly to customer accounts or contact them regarding debt write-offs. This proactive approach aims to ensure that those who suffered from these unjust practices receive the redress they deserve without having to navigate a complex application process.
The forced prepayment meter scandal served as a stark reminder of the need for robust consumer protection within the energy market. In response, Ofgem has introduced a new, mandatory Code of Practice with significantly stricter conditions that energy companies must meet if they wish to install prepayment meters without customer consent. These new rules emphasize that forced installations should only be a last resort and are prohibited for certain vulnerable groups, such as those over 75, households with children under two, or individuals with terminal illnesses. Suppliers are now also required to conduct independent audits to identify past wrongful installations and offer compensation, along with swapping meters back to non-prepayment methods where appropriate.
While compensation is being distributed, the wider implications of this scandal continue to resonate. The focus remains on preventing such abuses from reoccurring and ensuring that energy suppliers uphold their obligations to all customers, particularly the most vulnerable. The increased scrutiny and the new code of practice signify a concerted effort to reform the energy market and "stamp out bad practice," as highlighted by Energy Secretary Ed Miliband, who underscored the importance of delivering justice to the families affected by this deeply concerning issue. The ongoing investigations into other suppliers underscore the commitment to fully address the breadth of this scandal and ensure accountability across the sector.
Source@BBC