Energy watchdog Ofgem is to introduce a new cap on upfront payments for those who are required to have pre-payment meter.
Whereas previously the maximum amount a household would have to pay for a prepayment meter was £900, the new cap will bring it down to £150.
The new changes will come about in the new year, with the most vulnerable customers having all costs waived completely.
Rachel Fletcher, Ofgem’s Senior Partner for consumers and competition said: “At the moment, vulnerable customers face a double blow when they’re hit with high warrant charges on top of existing debt – risking making situations worse. The measures will protect all consumers, including the most vulnerable, from experiencing unnecessary hardship due to having a meter installed under warrant.”
Many people fall into debt with their energy provider, and if you can’t pay or can’t come to a payment plan with the company you can be forced to have a pre-payment meter installed. A pre-payment meter is essentially a pay as your go method rather than your standard monthly tariff. This means you must load a certain amount of money onto your meter to have any energy. The supposed advantage of this is that you can’t fall into any more debt, as you only spend what you have paid for.
However, problems arise due to the fact that the energy on a pre-payment meter is going to be more expensive than a standard tariff, this means that vulnerable customers will most likely be left in situations where they cannot afford to top up their meter and are left without power.
In 2016 alone 40,000 prepayment metres for gas and 41,000 prepayment metres for electricity were installed.
Rules currently allow suppliers to charge customers for the cost of obtaining a warrant, court costs as well as a locksmith. Ofgem has also told energy suppliers that installing a pre-payment metre should be a last resort utilised only after all other means have been exhausted.
“We want to send a strong message to suppliers that using a warrant to install a PPM is a last resort. They must step in early to help customers manage debt through repayment plans,” Fletcher said.
The cap on prepayment meter installation costs follows the government’s introduction of draft legislation that will compel Ofgem to enforce a price cap on standard energy tariffs, most likely from 2019 onwards. Both of these measures are part of a wider project to protect vulnerable or unengaged energy customers from being systematically overcharged. However, major energy firms have criticised the tariff price cap as something that they argue will negatively impact competition by pricing out smaller providers. The government disagrees.
