Watchdog says new rules will protect vulnerable customers
Britain’s energy regulator has introduced tougher curbs around suppliers’ use of pre-payment meters under new rules aimed at protecting vulnerable customers.
Ofgem said on Wednesday that, from November, energy companies would not be allowed to forcibly fit the devices in the homes of people with severe health problems, those aged over 75 without domestic support, or with children under the age of two.
The move follows criticism of Centrica-owned British Gas in January over allegations that third-party contractors broke into vulnerable people’s homes under court warrant to install the devices as bills soared in the wake of the energy shock.
Following the allegations, Ofgem imposed an industry-wide moratorium on forcible installations, despite warnings from British Gas that all households would face higher bills if suppliers could not prevent struggling customers from running up large debts.
Neil Kenward, Ofgem’s director of strategy, said the new rules would “provide protection from bad practices” and make sure that pre-payment meters were used by suppliers in a “fair and responsible way”.
“Pre-payment meters are an important payment method that help millions of households to manage their energy bills. But they are not suitable for everyone,” he added.
The new rules mark a tougher stance from Ofgem compared with April, when it originally set out a new voluntary code of practice. Now mandatory, the code has reduced the upper age limit to 75 from 85, as first envisaged.
Under the new rules, suppliers will also have to add £30 credit to new force-fitted pre-payment meters to avoid sudden disconnection, and keep video recordings of all forcible installations.
If energy companies do not comply with the new rules, they face “enforcement action and substantial fines”, said Ofgem.
The watchdog’s announcement came as Jonathan Brearley, chief executive, warned that some households faced even steeper energy bills this winter than last.
The energy price cap — which dictates bills for more than 23mn households and provides an estimate based on average annual usage — is set to fall from a record £4,279 in January to £1,923 in October, on the back of drops in wholesale gas prices.
But Brearley told MPs on Wednesday that because the level of government support for households had also fallen since the start of this year, “for many people their bills will be very similar this year, and possibly worse for some”.
When the new price cap was announced last month, the government pointed out that low-income households were continuing to receive help towards the cost of living, including £900 paid in three instalments.
Dame Clare Moriarty, chief executive of Citizens Advice, a charity, said Ofgem’s announcement on tighter restrictions did not go far enough to “stop all families with children under five from being forced on to a pre-payment meter”.
“As we head into what will be yet another incredibly difficult winter for many, it’s essential suppliers ensure that none of their vulnerable customers are forced on to a pre-payment meter,” she added.
Source: Financial Times
