Citizens Advice estimates that 3.2 million people in Britain ran out of credit on their prepayment meter last year, the equivalent of one every 10 seconds. Energy companies have been giving customers no choice but to change to a prepayment meter, even when they are unable to access ways of topping up their energy card. While some cards can be topped up online, others must be presented to an appropriate shop or post office to add credit.
In some cases, a meter has to be physically installed in the home, which would require a court warrant to allow an energy firm to enter the property. However, in the case of smart meters, energy companies can switch a credit meter to prepayment mode remotely – and have, in some cases, been doing so without giving any notice.
This means that, unless the customer adds credit to their meter in advance of using it, no energy will be available to the household. In addition, the tariff for a prepayment account is usually more expensive than for accounts paid by direct debit.
Energy UK defended the use of prepayment meters, saying that it had for a long time been a means of budgeting. However, the organisation said that energy companies are required to exhaust other options before resorting to prepayment meters and ministers said that energy firms must offer help to those struggling financially.
Citizens Advice said that more people were unable to add credit to their prepayment meter in 2022 than during the entire ten year period prior to last year. In 2022, almost 500 people had contacted the charity after being forcibly moved onto a prepayment meter, a 158% increase in cases on 2021. It predicts that 450,000 people could be forced onto a prepayment plan this winter, of which around 180,000 could be switched remotely via a smart meter.
The government has previously said that energy suppliers are expected to help customers who struggled with bills and “can only install prepayment meters without consent to recover debt as a last resort”. Emergency credit and support should be offered to prepayment customers in “vulnerable circumstances”.
Ofgem, the energy regulator, stipulates that some people including disabled people and those with long-term health conditions should not be forced on to a prepayment meter, but could choose to move to one if they wished.
When news of the forced prepayment meters broke, the regulator issued a temporary ban in February on installing prepayment meters under warrant that would last until 31 March 2023.
However, the timing of this has raised concerns. In April, some energy consumers will face increases of as much as 40%, as the rebate scheme ends and the price cap increases to £3,000.