Tens of thousands of people who were forced to have prepaid energy meters fitted are in line to get compensation.
Customers could get up to £1,000 each, as well as have their debt written off, with over £70 million put aside for compensation.
It relates to housesholds who had an prepayment meter (PPM) fitted without their consent between January 1 2022 and January 31 2023.
Ofgem said suppliers will pay £5.6 million in compensation to 40,000 customers, and will also write off a further £13 million of debt.
This is in addition to £55 million already provided directly to consumers in the form of hardship payments and debt write-off.
Announcing the end of their review into eight suppliers today, Tim Jarvis, director-general of markets for Ofgem, said: ‘It has taken time, but our priority has been to put things right for those who weren’t treated properly, and ensure we don’t see bad practice repeated.
‘While the number of cases where a prepayment meter was wrongfully installed is relatively low compared to the total number of PPM customers, one case is one too many.
‘Our review also found wider issues with the processes suppliers had in place, which is why we’ve put in place clearer, tougher rules to protect customers in vulnerable situations.’
How can I claim?
You do not need to make a claim, Ofgem said.
Those who are affected will be contacted by their suppliers, and do not need to take action.
What is the prepayment meter scandal?
The scandal is fairly recent, only going back two years to the height of the cost of living crisis. This is when energy bills shot up after the invasion of Ukraine, and more people fell behind with their bills.
There was a public outcry after it was revealed that debt agents broke into some people’s homes to fit meters without their consent.
Others were switched over remotely to the pay-as-you-go system, which is the most expensive form of energy, more costly than for those who pay via direct debit.
It meant that if customers didn’t have enough money to pay for their energy, they could be left without heating, lights, or cooking power, even in winter.
Which companies does it affect?
- Scottish Power
- EDF
- E.ON
- Utility Warehouse
- Good Energy
- Tru Energy
- Ecotricity
- Octopus (because acquired Bulb and Shell, who had cases of customers being force fitted)
Enforcement investigations into British Gas, Utilita and OVO have not yet finished, so they are not part of today’s announcement.
Writing in Metro in 2023, Dawn Butler MP criticised the forced fitting of these meters, saying: ‘It is unfair and inhumane to disregard the vulnerability and the impact on these people’s lives.
‘I was once strongly in favour of smart meters, but with the availability of remote switching, it has now had unintended consequences and must always ensure the protection of customers.’
British Gas came in for especially heavy scrutiny. A Times investigation claimed agents strong-armed into the homes of people who had fallen behind with bills to fit the devices, even if children and disabled people were living there.
Among those made to switch included a woman in her 50s living with ‘severe mental health bipolar and a mother whose ‘daughter is disabled and has a hoist and electric wheelchair’, the newspaper alleged.
The government stepped in with new restrictions that it should not be done to elderly or other vulnerable people.
‘Justice finally being delivered’
Dhara Vyas, chief executive of Energy UK, which represents energy firms, said today: ‘Suppliers have worked hard to co-operate with this comprehensive review and taken further action to put things right in the cases where a prepayment meter (PPM) shouldn’t have been installed – or where there was insufficient support for the customers concerned.
‘Suppliers have been working closely with Ofgem to meet the requirements of its review and have signed up to the Code of Practice before they have been able to restart involuntary installations of PPMs and have carried out thorough testing of the new processes.
‘Involuntary installations have been a last – but necessary – resort for cases where repeated attempts to address debt with the customer through other means have been unsuccessful. It’s bad for customers to fall further and further into arrears, and bad debt ultimately drives up the prices that are paid by all customers.
‘Since the pause on installations, customer debt has risen to a record £4 billion, and the industry remains keen to work with Ofgem on the proposed relief scheme to tackle this problem.’
Energy Secretary Ed Miliband said: ‘Justice is finally being delivered to many of the families, lots of them vulnerable, who were affected by the scandal of energy suppliers wrongly forcibly installing prepayment meters.
‘The Government has campaigned tirelessly on this issue and are pleased to see the level of compensation increase to £18.6 million, up from £420,000 under the previous government.
‘Consumers must come first, which is why we are reforming the energy market to stamp out bad practice and make it easier to access proper redress when things go wrong, through our comprehensive review of Ofgem. This increased compensation package is a good start, and we will be announcing further reforms in the weeks ahead as we deliver our Plan for Change.’
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