Energy firms should start removing prepayment meters and compensating families whose homes were wrongly fitted with one, the regulator has said.
Ofgem boss Jonathan Brearley said that companies must review their installations immediately instead of waiting for the results of a review due to be announced at the end of March.
A six-week pause until March 31 was announced earlier this month, after details emerged in a Times report of debt agents for British Gas breaking into vulnerable people's homes to force fit meters. The regulator ordered energy suppliers to halt the practice of forcing customers to have prepayment meters fitted against their will if they have fallen into debt.
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Ofgem has committed to concluding a review on the treatment of vulnerable customers by the same date. Mr Brearley said any systematic problems would lead to fines for suppliers but he rejected the accusation on BBC Radio 4's Today programme that Ofgem had been too slow on the issue and said the regulator had been clear to companies about the rules.
"If companies know they inappropriately installed a prepayment meter, then they should fix it now," he said, clarifying that this meant switching the meter back to a regular one, if that was what the customer wanted, and giving compensation. Mr Brierley said that Ofgem cannot order companies to do so until its review is complete, but that companies would know quickly when there were clear issues to settle.
Suppliers have argued that installing prepayment meters allows them to recover debts and stops consumers amassing larger amounts of debt. Energy UK, the trade association for suppliers, has regularly highlighted that suppliers can be left with debts from customers who do not pay their bills. These mounting debts would have to be recovered from everyone else's bills if there was no option of moving people onto prepayment meters for debt recovery.
"Suppliers have already paused prepayment installations by warrant in order to carry out reviews of their own practices and they will look to put things right if they find cases where prepayment meters have been installed inappropriately," Energy UK told the BBC. "The industry has already been talking to Ofgem and the Government about how best we can support the most vulnerable customers going forward, including the role a social tariff could potentially play, which needs to be part of the discussion around the use of prepayment meters."
Ofgem’s chief executive Mr Brearley previously told Sky News: “We are aware of the difficult balance here as unrecoverable debts from some customers may then be recovered from the bills of paying customers, many of whom are themselves struggling with paying their bills given the wider affordability issue.
“We have an ongoing programme of work to assess costs to suppliers from customer debt. Once we have analysed your responses to our request for information on debt, we will be able to determine what action we need to take and, if an adjustment is required, we will act quickly.”
Citizens Advice Newcastle has joined the call for new protections to stop people being fully cut off from energy if they could not afford to top up and said there must be a total ban on energy companies forcing those already at breaking point onto prepayment meters.
The charity has previously warned of its fears that people could die in their cold homes amid figures from the CAB that 3.2 million people in the UK had been left without energy at some point last year after struggling to top up their meter in the cost of living crisis. An estimated 600,000 people were forced to make the switch away from credit meters after racking up debt with their energy supplier in 2022.
There are more than four million UK households on prepayment meters, which supply energy only when customers top-up their meter with credit. MoneySavingExpert.com founder Martin Lewis has previously said moving customers onto prepay meters meant many would essentially self-disconnect from gas and electricity, adding that energy firms shouldn't be let off the hook if they blame third-party contractors for any failings.
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