How do prepaid energy meters work and what is being done to prevent people’s power cuts?

According to Citizens Advice (Alamy/PA), more than 3.2 million Britons used up credit on prepaid meters in 2022

According to Citizens Advice (Alamy/PA), more than 3.2 million Britons used up credit on prepaid meters in 2022

The government is being asked to prevent energy companies from following court orders that forcibly install prepaid meters in the homes of customers who cannot pay their bills.

A new report by Citizens Advice has revealed that an estimated 3.2 million people in the UK have run out of credit at the prepayment meter last year, meaning one person is literally left in the dark every 10 seconds.

Based on figures from UK energy regulator Ofgem, the charity estimates that 600,000 people were forced to use a prepaid meter in 2022, down from 380,000 in 2021.

Citizens Advice said it fears another 160,000 people could be displaced by the end of this winter if no action is taken amid the ongoing cost of living crisis.

“People who find it most difficult to pay their bills are often forced to use a prepaid meter they can’t afford to top up,” said Dame Clare Moriarty, general manager of the advisory service.

“This puts them at risk of being left in cold, damp and dark homes. The staggering increase in the cost of living means that many cannot afford to heat their homes and electricity to safe levels.

“New safeguards are needed to stop people from being completely cut off from gas and electricity. Until then, energy companies should be completely banned from forcing those already at breaking point into prepaid meters. If Ofgem does not act, the government must intervene.”

Currently, a customer who is significantly behind on their monthly bills is often asked to switch to the pay-as-you-go prepayment counter to ensure the provider gets paid.

By loading credits on a smart card, users effectively pay before using energy rather than responding to a bill after the event. This is then fed into the wall-mounted unit and powers the household until the credit is used up, at which point they need to load more money on the card or be left without electricity and gas.

The transition to this pay-as-you-go model can be done remotely if the person in question has a smart meter, but if not, suppliers or debt collection agencies acting on their behalf may reportedly obtain permits to enter homes with some judges. fulfill hundreds of such requests in one sitting.

Simon Francis, coordinator of the End Fuel Poverty Coalition, voiced his support for Citizens Advice’s campaign, commenting: “Energy firms and government should bow their heads in shame.

“Judges who collectively approve court orders for energy firms to install prepaid meters should also consider their role in this injustice.”

What makes the practice doubly controversial is the fact that prepaid meters charge customers a higher rate for energy than they would be billed on a monthly or auto-pay contract. This means that people who are already in debt have no choice but to effectively “disconnect” when they cannot afford to pay off the debt.

Citizens Advice found that for many this was far from a one-time event, with more than 2 million prepaid customers being without power at least once a month, with 19 percent of those customers going without gas for at least 24 hours after a power outage. or electricity, they cannot turn on the heating or cook a hot meal.

“Why should those who have the least pay more for their energy?” Labor shadow chancellor Rachel Reeves tweeted In response to Thursday’s report. “This is outrageous, unfair and the Labor Party will put an end to this punishment.”

A government spokesperson responded to the findings: “The government expects energy suppliers to do everything they can to help customers struggling to pay their bills, and suppliers can install prepaid meters without their approval as a last resort to repay their debts.

“Regulatory Ofgem requires energy suppliers to provide solutions for customers who are at risk of debt or disconnection. This includes providing emergency credit to all prepaid meter customers and additional support credit to vulnerable customers.”

Citizens Advice said it was particularly concerned about the app’s impact on those living with long-term health conditions and people with disabilities, who, according to Ofgem’s guidelines, should be protected from being forced into a prepayment meter to prevent such situations from occurring. because they can’t cool vital drugs.

A British Gas prepayment meter (Peter Byrne/PA)

A British Gas prepayment meter (Peter Byrne/PA)

The advisory service has previously expressed concern to both Ofgem and the government that it has seen evidence of suppliers forcing people in these groups to pay-as-you-go counters.

Ofgem duly warned suppliers last October that not enough efforts were made to identify vulnerable customers before installing a prepayment counter.

However, Citizens Advice is now calling for reform that in the month following this intervention, more than a third of prepaid meter households had their energy supplies cut at least once, including a person with a disability or a long-term health condition.

“Suppliers need to exhaust all other options before installing a secured prepayment meter – only after repeated failed attempts with the customer to discuss reimbursement options and checks to ensure they do not proceed when customers are at their most vulnerable.” said Dhara Vyas, deputy managing director of Energy UK.

“The energy industry is well aware of the challenges millions of households are facing right now – which means making tough decisions about indebted customers because suppliers need to keep customers from getting more debt-ridden. As any increase in bad debt is offset by bills, ultimately it’s more cost-effective to all consumers. it costs more money.

“Energy suppliers are discussing these concerns with government and regulators, including looking at options to lower the price prepaid customers pay.”

Additional reporting by agencies

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