Energy companies under spotlight as Ofgem threatens legal action over poor pre-payment meter practices

The UK energy regulator, Ofgem, plans to investigate whether energy companies are treating customers fairly when it comes to pre-payment meters.

The review will focus on self-disconnections, remote switching, and forced installations, as well as the checks and balances companies have in place when deciding to put a customer on a pre-payment meter.

If companies are found to have not taken due care, Ofgem will take legal action against them.

Prepayment meters, which allow customers to pay for gas and electricity on a pay-as-you-go basis, have long been controversial.

Many argue that they disproportionately affect low-income households and can lead to financial hardship and disconnection from essential services.

Historically, pre-payment meter customers have paid more for their energy than customers paying by direct debit.

Ofgem’s announcement follows the UK government business secretary, Grant Shapps’, call for suppliers to stop the practice or face being “named and shamed”.

Deeside politician Jack Sargeant has urged the UK Government to “act” instead of writing letters to energy suppliers who have been “mistreating” vulnerable customers by forcing them onto controversial prepayment meters.

The Alyn and Deeside MS believes UK government ministers have “belatedly conceded the extent of the scandal.”

Ofgem supports the UK government’s call for energy companies to voluntarily do more to protect customers and stop forced installations of pre-payment meters, unless all other options have been exhausted.

However, the regulator does not have the legal power to completely ban forced installations via the courts.

Furthermore, Ofgem will continue to examine the rules around mandatory moves to pre-payment meters, including when a court warrant can be applied for and the steps that need to be taken first.

The regulator is also encouraging energy companies to be transparent with their data around pre-payment meter warrants.

Jack Sargeant MS wrote to Grant Shapps in December, calling for an immediate ban on the forced installation of prepay meters and for action to be taken to ensure nobody already switched to a prepay will be cut off this winter.

The Alyn and Deeside MS believes that the Secretary of State’s words of “concern” in his letter on Sunday “amount to an admission that hundreds of thousands of people have been inappropriately switched and that these people are at extreme risk of being without energy.”