The business secretary has urged energy suppliers to stop forcibly switching households struggling with energy bills to prepayment meters, after calls for government action amid claims that millions have been left without heat or light.
Grant Shapps has written to companies asking them to voluntarily end the practice of compelling households to move to more expensive prepaid energy tariffs and promising to “name and shame” the worst offenders.
Energy firms should instead make greater efforts to help those struggling to pay their bills, such as offering credit or debt advice, Shapps wrote, suggesting prepay installations should be a last resort. He also requested suppliers reveal the number of warrant applications made to forcibly enter properties to install meters.
Earlier this month, the Guardian revealed that 3.2 million people – the equivalent of one person every 10 seconds – were left with cold and dark homes last year after running out of prepay credit, according to Citizens Advice data.
Under existing rules, energy firms are not allowed to forcibly install prepayment meters or remotely switch a household’s smart meter to a prepay tariff without first exploring the financial help on offer or carrying out appropriate assessments, including identifying any vulnerability.
Older people or those with an illness or disability who are unable to use a prepayment meter are supposed to be protected under the regulator Ofgem’s licensing rules. Customers must also have been given time and help to pay.
Despite this, the courts have been inundated with requests from suppliers to switch customers. Data obtained from the Ministry of Justice through a freedom of information request revealed hundreds of warrants of entry are being signed off in huge batches in minutes in by magistrates.
Such warrants authorise staff to break into people’s homes and install a prepayment meter. Households with one pay a 2% price premium, while those on card meters face the extra cost and hassle of having to travel to buy them.
Ministers have been urged by fuel poverty charities and a cross-party coalition of MPs to halt the practice of forcible installations, with Labour calling for a three-month moratorium.
However, the government is resisting such a ban amid concerns over a subsequent increase in bailiff action as customers rack up bills they are unable to repay, leaving energy companies trying to recover bad debts.
Shapps said: “Suppliers are clearly jumping the gun and moving at-risk customers on to prepayment meters before offering them the support they are entitled to – I simply cannot believe that every possible alternative has been exhausted in all these cases.”
He added: “Rather than immediately reaching for a new way to extract money out of customers, I want suppliers to stop this practice and lend a more sympathetic ear, offering the kind of forbearance and support that a vulnerable customer struggling to pay should be able to expect.”
Hundreds of thousands of customers have been switched over to more costly prepayment meters in recent months, often unwillingly and without the offer of support, after failing to keep up with rising energy payments.
Last week, ScottishPower, which has nearly 5 million customers, said it had stopped recovering outstanding debts from people who have been moved on to prepayment meters. British Gas said it would no longer switch smart meter customers remotely to a prepay tariff this winter unless they ask for it.
Responding to Shapps’ letter, the body representing suppliers, Energy UK, said: “Suppliers are already required to have exhausted all other options before installing a prepayment meter by warrant … suppliers also have a duty to manage debt and to try and prevent customers falling further into arrears.
“If the option to install a prepayment meter - after exhausting other options - is removed, then it needs to be acknowledged that this will lead to a significant increase in bad debt, which has already been rising steeply in recent months, and is ultimately recouped from customer bills.”
On Monday, the business department named the energy suppliers it said had been the worst at delivering its £400 energy bill support scheme.
The Guardian reported last month that up to half a million of the UK’s most vulnerable families had been left without the payments, with an estimated 1.3m vouchers for homes with prepayment meters either lost, delayed or unclaimed.
Good Energy, Utilita and Scottish Power were named in data published on Monday as the companies with the fewest redemptions for prepayment customers.
The little-known E Gas & Electricity came top with an 85% success rate, with Bulb coming in second with 79%. Shapps said that overall, 71% of vouchers have now been redeemed since the scheme launched, up from 65%.
