Ofgem to strengthen protections for PPM customers

Ofgem has revealed plans to introduce increased support for prepayment meter (PPM) customers as part of a permanent licence requirement.

In addition, enhanced ability to pay principles mean suppliers will be required to offer more support to all customers struggling to pay their bills.

At the beginning of the pandemic in March energy suppliers voluntarily agreed to support the most vulnerable, including PPM customers facing difficulties in topping up while self-isolating or in financial distress.

The regulator says that even before the pandemic it had concerns about increasing numbers of PPM customers who self-disconnect, or go without energy, after running out of credit on their meter since, and last year it consulted on requirements for suppliers to identify customers who are self-disconnecting and self-rationing and provide appropriate support.

The proposals announced today (29 June) will require suppliers to take all reasonable steps to identify all PPM customers who are self-disconnecting and offer appropriate support. They will also have to offer emergency and friendly hours credit (for example, when top-up points are closed) to all PPM customers.

Suppliers will be required to offer additional credit for vulnerable consumers, providing them with extra breathing space while working out alternative arrangements to pay, including customers who temporarily cannot afford to top up or get to their local shop to top up because of a mobility issue or due to self-isolation.

Many suppliers already provide extra support, typically £5-£20 credit per fuel at a time, but Ofgem says this is inconsistent across the industry.

The energy regulator is also proposing suppliers provide extra support to assist customers paying their energy bills from this winter.

This includes setting repayment rates based on a customer’s ability to pay and monitoring these arrangements. Ofgem said while it recognises many suppliers already offer this support, making it a formal licence requirement will ensure more customers are helped.

In addition, Ofgem will closely monitor the steps suppliers are taking to identify consumers in vulnerable circumstances who are self-rationing their energy use. The regulator will then assess whether future changes to the rules will be needed in this respect.

Jonathan Brearley, chief executive of Ofgem, said: “I want to thank suppliers for their efforts during this crisis in keeping essential energy supplies flowing to customers, particularly those in vulnerable situations.

“These permanent protections will reduce the number of prepayment customers temporarily going without energy because they cannot afford to top up.

“It is always best for customers to keep up with their energy bills if they can. But at this time when many may face financial hardship, these proposals mean those who are struggling to keep up are assured of some breathing space.”

Ofgem says it expects to publish its licence modification later this year, with protections expected to be in place by the end of 2020.

In response to the proposals, an Energy UK spokesperson said: “Energy suppliers work hard to support their customers, particularly vulnerable customers including those who use prepayment meters, and many are already offering extensive support in line with the proposals, going beyond existing licence requirements.

“In addition, following last year’s report from the independent Commission for Customers in Vulnerable Circumstances, Energy UK is continuing to work on a new set of voluntary principles to further improve levels of support from suppliers for such customers, which we hope to publish later this year.”