Who is standing up for prepayment meter households? An open letter

On 31st March, the pause in the installation of prepayment meters by warrant will end. The appalling treatment of prepayment meter customers, who are among the most financially vulnerable people in the UK, is a national scandal. Ofgem, the UK’s energy regulator has fundamentally failed in its role to protect vulnerable energy users and while they have recently been forced into finally taking action, pressed by public outrage rather than any sense of proactiveness on their part, prepayment meters still endure a number of injustices that the government have yet to fix. Below is the email I have sent to my local Conservative MP, Richard Fuller, setting out how Ofgem has failed as a regulator, pointing out the continuing sky-high standing charges endured by PPM customers and the lack of progress by the government on the urgent need for a ‘social tariff’ providing reduced rate energy for financially vulnerable households.

Dear Richard

Following on from my email to you on 8th December 2022 and your reply on 14th December, I am writing to you to draw your attention to issues arising from your reply and subsequent actions taken by the government. Bearing in mind that the pause in prepayment meter installations is due to end on 31st March, I ask that you give the issues below urgent attention.

In my email to you, I drew your attention to households being forced onto prepayment meters at an industrial scale, without the required notice period, via remote switching, and in cases where the customer was vulnerable. You responded by saying:

“In relation to prepayment meters, Ofgem has taken a number of actions on prepayment meters in recent times. It warned suppliers in June 2018 that prepayment meters should be installed only as a last resort for debt collection. Ofgem banned forcible installation for vulnerable customers in 2017”.

Subsequent events have set out that Ofgem fundamentally failed in its role of (in words taken from their website ) “stamping out sharp and bad practice, ensuring fair treatment for all consumers, especially the vulnerable”. The disgusting treatment of vulnerable customers was revealed not by Ofgem, but by an undercover reporter. I also remind you that only back in November 2022, Ofgem gave British Gas a clean bill of health, stating that their approach to vulnerable customers only had ‘minor weaknesses’ (link below).

I believe Ofgem is currently not fit for purpose and is failing to carry out its responsibilities in a timely manner. Its recent action against British Gas only came as a result of a public outcry, not proactive or effective monitoring on their part. Can you advise what steps the government will take to ensure that Ofgem will actually work effectively to protect energy consumers? 

While it is welcome that the government will remove the longstanding premium paid by prepayment meter customers in the higher rates they pay per kWh of energy there still remains the injustice of the exorbitant daily standing charges paid by PPM households which the government will not resolve until April 2024 (link below – Spring Budget para 2.25 p40). This standing charge premium is partly a result of money being clawed back from the ‘Supplier of last resort Scheme’ after a number of companies folded due to weak oversight by Ofgem and shady practices by the companies.

It is plainly unjust that prepayment meter customers are shouldering the cost of the failures of the regulator and sharp practices by unscrupulous energy company CEO’s. I request that you ask for this standing charge premium applied to PPM customers be removed as a matter of urgency.

While there is talk of a ‘social tariff’ that will provide a reduced price tariff for financially vulnerable energy users there is little action. Other countries provide social tariffs, so why is it proving so difficult for the energy regulator and the UK government to sort this issue out promptly?

I’m sure that you are aware that many households are struggling to afford to heat their homes, even with the government support that is being given. Can you ask the relevant government department what the timescale is for a social tariff to be introduced?

Aside from the mental and physical health impacts of being disconnected from their energy supply and the resulting cold and damp homes, prepayment meter customers have to endure the further accumulation of debt via their daily standing charges that continue to apply even after they have been cut off and are shivering in cold and unlit homes. I hope you will agree that this situation is beyond grim.

Can you ask that steps are taken to stop the accumulation of further debt in this manner and that when a prepayment meter household is disconnected, their standing charge is halted until the time of reconnection?

The pause in the installation of prepayment meters is due to end (for all suppliers except British Gas) on 31st March. I have little confidence that sufficient safeguards are in place to protect vulnerable customers from inappropriate prepayment meter installations. In addition, the higher standing charges paid by PPM customers and the lack of a social tariff mean that PPM customers will continue to pay the highest rates for their energy even though they are the most financially vulnerable. This is clearly unjust.

I would be grateful if you would urgently make the case for the pause in the installation of PPMs to be continued until the three issues mentioned above; adequate safeguards, reduced standing charges, and a social tariff have been introduced.

Finally, Ofgem in a written answer to the Business Energy and Industrial Strategy Committee in October 2022 stated that they are collecting data on the number of self-disconnections by repayment meter customers and will release this information in ‘early 2023’. I have been in touch with Ofgem in the last week and they are still unable to provide a firm date for publication.

Can you press Ofgem or the relevant Minister as to when this data will be published?

Please do get in touch if you have any questions. As before, please regard this as an open letter.

Julian Vaughan

26th March 2023


Spring Budget 2023 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1144441/Web_accessible_Budget_2023.pdf

Ofgem review into how suppliers support customers in vulnerable situations – published 27th November 2022 https://www.ofgem.gov.uk/publications/ofgem-completes-review-how-suppliers-support-customers-vulnerable-situations

Ofgem written evidence to the BEIS committee – October 2022 https://committees.parliament.uk/publications/30191/documents/174915/default/

The injustice of prepayment meters – an open letter to my MP 8th December 2022 https://julianvaughan.blog/2022/12/08/the-injustice-of-prepayment-meters-an-open-letter-to-my-mp/

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