Tens of thousands of struggling families could see debts wiped and compensation paid out in £70m scandal fallout. Tens of thousands of households hit by the scandal of forced prepayment meter installations are to receive compensation of up to £1,000 — with some also having their energy debts completely written off.
Energy suppliers have been ordered to pay out more than £70 million in total in financial redress after a damning Ofgem probe revealed widespread mistreatment of vulnerable customers. The watchdog’s investigation found that energy firms repeatedly broke the rules by forcibly switching those in arrears to prepayment meters – often without proper checks and, in some cases, by breaking into homes.
In one shocking case, Aaron King, 54, from Kent, told the BBC: “They [the energy company] had gone in and fitted prepayment meters, taking police and locksmiths with them. They also charged me for the police and locksmiths being there – over £400. Maybe I will now get some money back.”
The forced installations took place during the peak of the cost-of-living crisis, when gas and electricity prices soared in the wake of Russia’s invasion of Ukraine. Agents for British Gas were found to have physically forced entry into the homes of vulnerable people, prompting widespread public outcry and a crackdown by regulators.
Ofgem outlines redress and reforms
Ofgem’s director general of markets, Tim Jarvis, said: “Our priority has been to put things right for those who weren’t treated properly, and ensure we don’t see bad practice repeated.”
Under the new package:
Affected customers will receive between £40 and £1,000, depending on how they were treated. Those who endured “inappropriate installation” will receive the maximum payout.
In addition, £13 million is being used to write off the debts of some customers who had meters installed against their will.
Customers of eight energy firms are in line for compensation:
Scottish Power
EDF
E.ON
Octopus
Utility Warehouse
Good Energy
Tru Energy
Ecotricity
So far, £55 million has already been handed out by these firms in financial support, with another £5.6 million in direct compensation to be paid to around 40,000 affected households.
More to come after Ofgem inquiry?
Notably, the watchdog is still investigating British Gas, Ovo and Utilita, meaning tens of thousands more households could yet be entitled to payments. Consumers do not need to take any action to claim. Ofgem said the money would be credited automatically to accounts of those affected, or they would be contacted directly by suppliers.
Dame Clare Moriarty, of Citizens Advice, said the damage done to vulnerable customers must not be ignored. “While it’s right that those rules have been tightened, it’s also vital that consumers get compensation for the distress that was caused,” she said.
The regulator has since introduced a new code of practice, with tighter rules for any future forced installations – although they have been permitted to resume in limited circumstances since January this year. Energy UK, which represents the major energy firms, said suppliers had worked closely with the regulator.
Chief executive Dhara Vyas said: “Involuntary installations have been a last – but necessary – resort for cases where repeated attempts to address debt with the customer through other means have been unsuccessful. It’s bad for customers to fall further and further into arrears, and bad debt ultimately drives up the prices that is paid by all customers.”
