Prepayment Meters: Code of Practice

Baroness McIntosh of Pickering Excerpts

Thursday 20th April 2023 Lords Chamber

[Baroness Bloomfield of Hinton Waldrist (Con)]

The noble Baroness asked a number of questions. First, Ofgem does not have the right to impose rules without consultation. It is an independent regulator accountable to Parliament, but this voluntary code is agreed by all suppliers; it will be put into their contracts by October. There were some nuances and details perhaps lost in the Ofgem announcement on Tuesday about the code of practice. The medium-risk group is always protected by the precautionary principle so, if there is any doubt that the consumer is financially vulnerable or likely to disconnect, they must not install a prepayment meter. The vulnerable group includes any family with children under five, the elderly over 65, those with many other serious medical conditions including Alzheimer’s and Parkinson’s, and those in temporary situations such as pregnancy and bereavement. Ofgem has worked very hard to try to include everybody in the prevention of installation of prepayment meters and will continue to do so. They have all been paused for the moment.

[Baroness McIntosh of Pickering (Con)]

My Lords, I refer to my interest as honorary president of National Energy Action. Could my noble friend address two vital issues that the code of conduct does not cover? First, prepayment customers pay more per unit than any other customer, regrettably, and that has so far not been addressed by the Government. Will she urgently address it? Secondly, the standing charge is increasing, often every six months, by up to 20% a time. That is a charge over which customers have no control whatever at a time when there is a cost of living crisis.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My noble friend is not quite correct, in that we are doing a lot to tackle the higher costs that PPM users pay, and the Government are taking action to end the prepayment penalty. There are specific costs associated with prepayment meters, not least that the Post Office is often used as a conduit for payment and charges, and there are some regulatory and system costs. We have acted, we are continuing to take action, and we are introducing reforms to the energy bills to remove this premium paid. For the moment, that will be covered by the energy price guarantee and there will be permanent resolution to the issue in April 2024.