Ofgem caps prepayment meter warrant charges for indebted consumers
10 Nov 2017 12:52 PM
Ofgem recently announced a £150 cap on charges for installing pre-payment meters under warrant for customers in debt, and banned charges for the most vulnerable.
- Charges for installing pre-payment meters under warrant for all consumers will be capped at £150
- High warrant charges can push consumers already struggling with debt into further financial stress
- Prepayment meter installations and charges banned for the most vulnerable
Suppliers can apply to the court and install a prepayment meter under warrant, as a last resort when customers fall into debt. Under current rules, suppliers can charge warrant costs back to affected customers. These charges, which can include court costs, are on average £400 for a dual fuel customer but can range up to £900 and risk pushing these customers further into debt.
Following consultation, Ofgem has announced measures to protect consumers from unnecessary hardship due to having a prepayment meter installed under warrant.
As well as the cap, these measures prohibit suppliers levying any prepayment meter warrant charges, and banning installations entirely, for the most vulnerable customers. This includes for example prohibiting charges for people in severe financial difficulty, and banning installations entirely for people for whom the experience would be severely traumatic, for example due to mental health issues.
In addition, Ofgem will introduce a proportionality principle covering costs and actions of suppliers, for all customers in the debt recovery process.
These measures will take effect from January next year.
Rachel Fletcher, Ofgem’s senior partner for consumers and competition, said: “Protecting vulnerable customers is a priority for Ofgem. At the moment vulnerable customers face a double blow when they’re hit with high warrant charges on top of existing debt – risking making their situations worse.
“The measures will protect all consumers, including the most vulnerable, from experiencing unnecessary hardship due to having a meter installed under warrant.
“We want to send a strong message to suppliers that using a warrant to install a PPM is a last resort. They must step in early to help customers manage debt through repayment plans.”
In April, Ofgem introduced a safeguard tariff to protect customers on prepayment meters overpaying for their energy. Last month Ofgem announced it would extend this safeguard tariff to 1 million vulnerable customers in February. There are plans to extend this safeguard tariff to a further 2 million vulnerable customers next winter, depending on the timing of the Government’s cap on standard default tariffs.
Notes to editors
- At the end of 2016 around 15% (3.5m) of GB gas and 16% (4.5m) of electricity customers used prepayment meters. Around 7% and 6% (roughly 250,000 and 300,000) of these respectively were currently in debt to their energy supplier. In 2016, 40,000 gas prepayment meters and 41,000 electricity prepayment meters were installed under warrant.
- When energy customers fall into debt, suppliers will attempt to collect payment over several weeks. This may include by e-mail, letters, telephone and house visits. If they don’t receive payments or arrange a plan with customers, they can apply to install a prepayment meter under warrant to help recover the debt. This should be a last resort before they consider disconnecting the customer. To get a warrant, the supplier must apply to the local magistrate. Then, they will visit the property and fit a prepayment meter with the help of meter engineers, locksmiths and dog handlers as required.
- Since 2013 there has been a reduction in the numbers of prepayment meters installed for debt and the number installed under warrant, following a long-term increase. Our analysis shows some suppliers waive charges in many cases. However, the number of warrants has not been decreasing as rapidly as the number of customers in debt, which shows that suppliers are continuing to actively use warrants for customers who get into debt.
- Ofgem’s prepayment warrant charges cap is an interim measure until smart meters are rolled out across GB.
- Ofgem’s statutory consultation, Prepayment meters installed under warrant - statutory consultation, closed on 29 August 2017. Recently we published our final decision: Decision to modify gas and electricity supply licences for installation of prepayment meters under warrant
- For more information about how the market is working for vulnerable consumers, including supplier’s performance on debt and debt repayment, see our State of the Market 2017 report.
- Citizens Advice has advice for PPM customers.
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