Charity calls for review of all PPM users

Citizens Advice is calling for a review of all users of prepayment meters (PPMs), with a commitment to replace them with credit meters where necessary.

It comes as research by the charity found 3.2 million people across Great Britain ran out of credit on their PPM last year because they could not afford to top up, the equivalent of someone being cut off every 10 seconds.

Furthermore in 2022 it spoke to almost 30,000 people who could not top up their PPM, more than the whole of the previous 10 years combined.

A nationally representative survey of more than 4,300 UK adults commissioned by the charity indicated that more than 2 million people are being disconnected at least once a month, with one in five (19%) of PPM customers spending at least 24 hours without gas or electricity after being cut off.

Citizens Advice says it is “particularly concerned” about disabled people, finding that nearly one in five (18%) households with someone in this group spent two days or more without energy supply after running out of credit.

In a scathing report released on Thursday (12 January) the charity claims PPM households have “too often been treated as second class citizens within the energy market”.

It added: “The regulator and industry have repeatedly failed to prioritise this group when rolling out sector wide improvements even though they often have the most to gain. Over the years, the regulator has also been slow to step in to protect prepayment meter customers from harmful practices. This must change.”

The report further takes aim at energy retailers and accuses them of breaching regulations in regards to installing PPMs.

Current Ofgem rules mean suppliers are not allowed to force those in vulnerable circumstances onto a PPM if they do not want one.

Yet the report says the charity’s frontline advisers have “consistently seen evidence of people in vulnerable circumstances being moved onto prepayment meters, in breach of energy supplier regulations”.

“We continue to see evidence of these practices even after the regulator wrote to suppliers in mid-November to remind them of their obligations,” it added.

In total Citizens Advice estimates that 600,000 people were forced onto a PPM for debt in 2022, compared to 380,000 in 2021, and it forecasts that more than 160,000 more could be moved onto a PPM by the end of this winter if no further action is taken.

Previously, the charity called for a temporary ban on the installation of PPMs. Yet following the findings of its report, it no longer believes this is sufficient.

The report’s key recommendation is for a total ban of forced PPM installations until new protections are introduced that ensure households can no longer be fully disconnected. This ban must include legacy PPMs and remote switches for smart meters.

Despite the concerns raised by Citizens Advice and a number of other organisations, not everyone in the sector believes an outright ban is the best way forward.

In a recent interview with Utility Week Steve Crabb, chair of Energy UK’s Vulnerability Commitment, warned against the practice.

He said: “It is very problematic and the difficulty comes in generalising as opposed to looking at the circumstances in each case.

“You have to have a solution, rather than just saying ‘this is bad’.”

Responding to Crabb’s comments Citizens Advice’s head of energy policy Gillian Cooper said: “Banning forced installations is the best way to protect people from being cut off from their gas and electricity until new protections can be introduced. People will still be able to choose to have a prepayment meter installed if it’s the best way for them to manage their money.

“Ofgem should then work with energy suppliers to make sure people are getting the support they need with debt.”

In response to the charity’s findings Dhara Vyas, deputy chief executive at Energy UK, reiterated the fact suppliers are “required to have exhausted all other options” before installing a PPM by warrant.

She added: “Prepayment meters have long been a way of helping customers monitor and budget for their energy usage.

“The energy industry is very aware of the challenges millions of households are facing right now – which means difficult decisions around indebted customers as suppliers are required to try and prevent them falling further into arrears.

“Any increase in bad debt ultimately ends up costing all consumers more money, as it is recouped from bills.

“Energy suppliers are discussing these concerns with the government and the regulator, including looking at options to reduce the price that prepayment customers pay.”