Tens of thousands of British households that had prepayment meters force-fitted in their properties are to share more than £18.6m in compensation and debt write-offs on their energy bills.
The energy regulator for Great Britain, Ofgem, found that energy companies forced prepayment meters on more than 150,000 homes that were not keeping up with their bills, in one of its most comprehensive compliance reviews.
The investigation found that ScottishPower, EDF, E.ON, Octopus, Utility Warehouse, Good Energy, TruEnergy and Ecotricity had fallen short of the regulator’s standards when using this tactic to reclaim unpaid energy debts.
The eight companies have committed to paying compensation and writing off energy debts for at least 40,000 customers.
However, the payments do not cover the customers of British Gas, Utilita or Ovo Energy, which face separate, ongoing investigations by the regulator.
Households affected by the scandal can expect to receive payments starting at £40, rising to £250 or £500, depending on the way they were treated by their supplier. Payments of up to £1,000 could be paid to customers who had faced “inappropriate installation”, Ofgem said.
Energy companies were found to have forced prepay meters into the homes of customers who were known to be vulnerable, including those with mental illnesses and young children, as the energy cost crisis in 2022 caused many to miss payments on their bills.
The regulator was heavily criticised for failing to halt the forced meter installations, despite repeated warnings from campaign groups and MPs. A moratorium was brought in after the Times reported in early 2023 that debt agents working for British Gas had ignored signs of vulnerability to fit the meters.
Ofgem allowed suppliers to restart forced meter installations less than one year later, although forced fittings in homes with young children or residents over the age of 75 remain banned.
Ed Miliband, the energy secretary, said: “Justice is finally being delivered to many of the families, lots of them vulnerable, who were affected by the scandal of energy suppliers wrongly forcibly installing prepayment meters.
“Consumers must come first, which is why we are reforming the energy market to stamp out bad practice and make it easier to access proper redress when things go wrong.”
The government is undertaking a review of Ofgem after the energy crisis caused more than 30 suppliers to go bust, and pushed household energy debts to a record high of £3.8bn.
It opened the consultation late last year saying it wanted to see “an energy market with healthy sustainable competition” and a regulator “that drives up consumer standards”.
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Emily Seymour, energy and sustainability editor at the consumer group Which?, said: “It would have been incredibly stressful for customers who were already struggling to afford their energy bills at the height of the cost of living crisis to be involuntarily switched to a prepayment meter.
“Prepayment meters should be used as a last resort to recover debt and shouldn’t be installed in households where there are young children under the age of two, individuals with severe health issues or people living alone over the age of 75.
“Once customers have repaid their debt, suppliers must contact them to check if prepayment is still appropriate and give them the option of switching to direct debit if they prefer.”
Tim Jarvis, a director at Ofgem, said the regulator’s investigation of the prepayment meter scandal has been “one of the most detailed reviews of supplier practices in Ofgem’s history, looking at tens of thousands of cases”.
“It has taken time, but our priority has been to put things right for those who weren’t treated properly, and ensure we don’t see bad practice repeated,” he said. “We have made our expectations clear to suppliers on how those customers who were treated poorly should be compensated.”
