Tens of Thousands Set to Receive Payouts Over Forced Meter Installations

Tens of thousands of energy customers are expected to receive payouts of up to £1,000 each, along with possible debt relief, in the wake of the scandal involving the forced fitting of prepayment meters.

Energy companies are providing more than £70 million in compensation and financial support to affected customers. This follows an investigation by the regulator, Ofgem, into suppliers’ practices of switching vulnerable customers to prepayment systems without their consent, after falling behind on bills.

Energy UK, which represents energy suppliers, stated that companies have made significant efforts to “put things right” following Ofgem’s intervention. Eligible customers will receive payments starting at £40, potentially increasing to £250 or £500, depending on the nature of their treatment or the extent of process failures. Ofgem has clarified that £1,000 payments will be made in cases of “inappropriate installation.”

Many customers may have already received assistance or been contacted by their supplier. Ofgem assured that customers do not need to take action, as payments will be made directly into their accounts.

“Our priority has been to put things right for those who weren’t treated properly and to ensure we don’t see bad practice repeated,” said Tim Jarvis, Ofgem’s Director General of Markets.

The issue came to light during the height of the cost-of-living crisis, sparked by soaring energy prices after Russia’s invasion of Ukraine. Reports emerged that energy firms were switching customers unable to pay their bills onto prepayment meters, either by remotely changing smart meters to prepay mode or by forcibly installing meters in their homes.

Public outrage intensified when British Gas agents were found to have forcibly entered the homes of vulnerable individuals to install meters. In response, Ofgem suspended all forced installations and launched a review of the practice covering January 2022 to January 2023. The review concluded that suppliers “fell short of required standards” in how they treated customers.

Ofgem’s announcement applies to customers of eight specific suppliers: Scottish Power, EDF, E.ON, Octopus, Utility Warehouse, Good Energy, Tru Energy, and Ecotricity. These companies have already provided £55 million in financial support. An additional £5.6 million will be paid as compensation to 40,000 affected customers, with a further £13 million allocated to write off debts incurred due to forced meter installations.

Enforcement investigations continue for British Gas, Utilita, and Ovo, potentially affecting tens of thousands more customers.

A new code of practice has been introduced, setting stricter conditions for suppliers intending to install prepayment meters without customer consent.

Dhara Vyas, Chief Executive of Energy UK, acknowledged that while companies have worked closely with Ofgem to meet regulatory requirements, there are instances where forced installations were considered necessary.

“Involuntary installations have been a last—but necessary—resort for cases where repeated attempts to resolve debt issues with the customer have been unsuccessful,” Vyas said. “It’s detrimental for customers to fall further into arrears, and bad debt ultimately raises costs for all consumers.”

Dame Clare Moriarty, Chief Executive of Citizens Advice, welcomed the measures but called for swift compensation disbursement to those most affected. “While it’s right that the rules have been tightened, it’s also vital that consumers receive compensation for the distress that was caused,” she said.