The petition of residents of the United Kingdom,
Declares that 4 million pre-payment energy customers, who are some of the most vulnerable in society and are more likely to be classed as fuel poor, are not afforded the same rights when in energy debt as standard credit and direct debit customers, allowing just minimal levels of debt, currently just £5 in some cases, before being disconnected from their energy supply; recognises the inherent risk to life for anyone disconnected from their energy supply, in particular the 1 million pre-payment meter customers with disabilities; notes that 3.2 million customers ‘self-disconnected’ last year as they ran out of credit, more in 2022 than in the last 10 years combined; notes that the term ‘self-disconnection’ alludes to an element of choice, but there is no choice for millions of households during this cost of living crisis; further notes that pre-payment energy customers pay more per unit of energy and more in standing charges than those who pay by standard credit and direct debit.
The petitioners therefore request that the House of Commons urge the Government to issue a ban on ‘self-disconnection’ for pre-payment customers; further urges the Government to ensure that pre-payment customers are given the same level of advice and support and the same length of time to pay as all other customers.
And the petitioners remain, etc.—[Presented by Anne McLaughlin, Official Report, 17 January 2023; Vol. 726, c. 336.]
[P002792]
Observations from the Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway):
The recent findings by The Times in relation to forcible installation of prepayment meters (PPMs) in the homes of vulnerable consumers is shocking and unacceptable, and the Government have acted quickly to tackle the issue of inappropriate PPM use. Following interventions by the Secretary of State and Ofgem, all energy suppliers have agreed to cease the forced installation of PPMs and the remote switching of smart meters to prepayment mode. This pause was due to end on 31 March but has now been indefinitely extended while Ofgem and industry agree and implement a code of practice to improve consumer safeguards. Additionally, magistrates courts in England and Wales are under instruction to stop hearing and ruling on applications from energy firms to forcibly install PPMs while the processes by which suppliers bring forward such applications is reviewed.
There are a range of protections in place for vulnerable customers, including those with PPMs. Ofgem licensing conditions include the ability-to-pay principle, and the obligation on suppliers to identify self-disconnecting and self-rationing PPM customers proactively. These rules require energy suppliers to agree repayment rates with customers in arrears, and to consider a customer’s ability to pay when calculating repayment rates for PPM customers in debt. They also require energy suppliers to offer emergency and friendly-hours credit to all PPM customers and additional support credit to customers in vulnerable circumstances.
Ofgem rules are clear that suppliers can only install a PPM to recover a debt as a last resort. Ofgem rules also require energy suppliers to only offer a prepayment service where it is safe to do so, with clear obligations on energy suppliers regarding supporting customers in payment difficulty. The Secretary of State has called for more robust Ofgem enforcement on these issues and Ofgem has responded to this by announcing a further review of supplier practice in relation to PPM customers, including targeted engagement accounting for the experiences of real consumers. This review will also assess how suppliers consider whether a PPM is suitable before taking any action such as remotely switching to PPM or installing a PPM under warrant. This review could lead to compliance action and redress where appropriate.
The existing licence conditions set by Ofgem will be reviewed, with a focus on the highest priority issues including identification of vulnerabilities, the PPM installation “safe and reasonably practicable” guidance, and processes in place for installing or switching customers to PPMs. This includes reviewing the relevant licence conditions and guidance to consider what else they should cover to further protect consumers, particularly those that are vulnerable.
After asking suppliers to review their activities around PPMs, Ofgem outlined failure to act where weaknesses have been identified as a factor that will be considered when it considers further action, which may include enforcement.
The Secretary of State has told Ofgem to toughen up on energy suppliers and investigate the customers’ experience of how their supplier is performing. Following this, Ofgem has committed to set up a new customer reporting system for households to pass on their own experiences of how they are being treated. Ofgem has also begun an intensive consultation process to look at what further protections may be needed around PPMs and seek views on other measures that could reduce the need for PPMs to be installed or switched to remotely. This will conclude by the end of March.
In the spring Budget 2023 the Government announced they will bring charges for consumers using prepayment meters in line with comparable direct debit charges.
PPMs can continue to play an important role in the market. They are a useful tool for some customers to prevent debt building up and a complete ban on PPMs would likely see a move to using debt enforcement via the courts and bailiffs, which is not a desirable outcome. However, it is important that the rules around their use are sufficient, and properly enforced.