Victims of forced prepayment meter installation to receive £18.6m
Tens of thousands of Brits are set to receive compensation after being forced to install prepayment devices in their homes.
Eight energy suppliers will be writing off debts or providing compensation – valued at a total of £18.6m – to at least 40,000 consumers.
This follows a review by Ofgem, the national energy regulator, which investigated cases where prepayment meters were installed without the customer’s consent, or were remotely switched to prepayment mode. These consumers, many of whom were known to be vulnerable, will be reimbursed with as much as £1,000 each.
Ofgem found additional issues including poor data quality and record keeping, meaning that indebted customers did not get the requisite support. This will see consumers receive either £40 or £250.
Customers who were treated unfairly by their energy suppliers will receive £250.
Suppliers have already provided £55m in the form of hardship payments and debt writeoffs to the consumers entitled to compensation.
Payouts will come from Scottish Power, EDF, E.ON, Octopus, Utility Warehouse, Good Energy, Tru Energy, Ecotricity.
In the case of Octopus, cases of force-fitted prepayment meters were inherited when they acquired customers from Bulb and Shell.
Ofgem will continue investigating British Gas, Utilita, and Ovo.
Looking ahead
Tim Jarvis, Ofgem director general of markets, said: “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.”
Ofgem has since introduced safeguards such as ensuring that suppliers must make at least 10 attempts to contact a customer and carry out a welfare visit before a prepayment meter is installed.
Dhara Vyas, chief executive at Energy UK, called for a more charitable response to suppliers, as they have “worked hard to co-operate with this comprehensive review and taken further action to put things right.”
“Involuntary installations have been a last – but necessary – resort … bad debt ultimately drives up the prices that are paid by all customers,” Vyas said, adding that “[s]ince the pause on installations, customer debt has risen to a record £4bn.”
A move away from forced prepayment meters is likely to prompt the industry to search for viable solutions to recouping energy debts at a time when household energy bills are on the rise.
Justice served
Energy secretary Ed Miliband celebrated that “justice is finally being delivered to many of the families, lots of them vulnerable, who were affected by the scandal.”
Miliband added that “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.”
Vera Hobhouse, Lib Dem MP, has called for payments to be doled out imminently. “Those affected have already waited too long for justice. Pay outs now need to be made in time for the winter months, when we know energy costs are higher,” Hobhouse said.
Hobhouse also accused the Tories of having “neglected” these victims, adding “to think that some may still not have all their debt written off is simply not right.”