Call for winter ban on forced PPMs

Ofgem’s “disappointingly limited” actions on forced prepayment meter (PPM) installations have been slammed by the government’s fuel poverty advisor, which has instead called for a further ban this winter.

The Committee on Fuel Poverty takes aim at the regulator’s measures to improve standards around forced PPM installations in its annual report.

The committee, chaired by former shadow energy secretary Caroline Flint, also urges suppliers “to think long and hard” before returning to the practice of forced PPM installations.

“Ofgem must ensure it knows what is happening in this space over the coming year and take action to protect customers who are not treated fairly by their suppliers in being switched involuntarily to paying through prepayment meters,” the report states.

“And those suppliers who have been active in forcibly switching customers on to PPMs need to think long and hard as to whether they should ever restart this practise.”

It adds that there should be a “ban on PPM installation in winter” because of “the tension between the need to assess financial vulnerability before deciding whether it is safe and reasonably practicable to install a PPM, and the ability for suppliers to access the information to make that judgement”.

All energy suppliers have signed up to the voluntary code of practice, which outlines more stringent processes before a forced PPM install can be carried out. It also means that certain groups are exempt from forced installs, including those aged over 85 and people with severe health issues.

Despite issuing the new code of practice, suppliers are still prohibited from applying for warrants for forced PPM installations until Ofgem publishes the initial findings of its market compliance review.

Energy UK has recently estimated that the PPM moratorium is adding around £30 million a month to the sector’s bad debt levels. However, Ofgem head of price cap policy Marcus McPhillips told Utility Week that that debt levels associated with the PPM moratorium are at the lower end of early estimates, dispelling fears over “can pay but won’t pay”.

A spokesperson for Ofgem said: “We are absolutely committed to protecting the most vulnerable energy consumers and acted quickly and decisively when concerns around involuntary PPM installations were raised. On top of agreeing an initial complete halt and launching Investigations and compliance reviews we have created, in consultation with consumer groups and charities, a strict new code for installing PPMs that all suppliers have signed up to.

“The next step will be to enshrine this code in the law. We will continue to monitor supplier behaviour and the impact on vulnerable and low-income consumers very closely. Long-term, the solution to affordability issues is cheaper, cleaner, homegrown energy for all and that is precisely what our net zero ambitions will deliver.”

The committee’s report also calls for an overhaul of the way fuel poverty households are identified in the UK. It warns that the current metric risks underestimating the number of households in fuel poverty.

It says that the Low Income, Low Energy Efficiency (LILEE) metric adopted in 2021 “is less effective at taking into account how high prices eat into household budget […] when prices increase substantially” as they have done in the past year.

Flint added: “After a year of exceptional high and rising prices, it may be necessary to review the effectiveness of the LILEE metric to accurately identify the number of households in fuel poverty.”

The report also calls on the government to think carefully before implementing infrastructure levies on to customer bills, warning that doing so “disproportionately impacts those in fuel poverty”.

It recommends that when considering policies which add to bills, government should carry out an assessment of the impact on fuel poverty prior to implementation.

It adds: “At the very least government should consider how to mitigate against the impact of additional charges on fuel poor and vulnerable households.

“For example, the proposal to move levies for social and environmental policy exclusively to gas consumers could exacerbate hardship for many low income and fuel poor customers who rely upon gas for space and water heating in the short to medium term.

“The timing of any such move should only occur when properties are substantially improved and when low income groups have frictionless access to alternative means of home heating.”

The committee also warns that targets to upgrade the UK’s housing stock by 2025 are at risk of being missed.

It argues that 704,000 properties that have Energy Performance Certificates of E, F and G, must be a priority for urgent upgrading, or the government’s 2025 milestone will be missed.

It warns that “this will further impact on the Government’s fuel poverty target ‘to ensure that as many fuel poor homes as is reasonably practicable achieve a minimum energy efficiency rating of Band C, by 2030’.”

Affordability is one of the themes at Utility Week Forum this October. To find out more click here.