Forced installation of PPMs ‘puts lives at risk’

Charities have reiterated calls for a temporary ban on the forced installation of prepayment meters (PPM) in the homes of customers struggling to pay their bills.

Thomas Brooke Bullard, senior policy researcher at Citizens Advice, said “lives are going to be at risk” if the issue is not addressed ahead of this winter.

Under the Ability to Pay principles, suppliers must base repayment rates for energy debts on customers’ ability to pay and then monitor the arrangements once they have been set up. If customers are struggling to make repayments, suppliers can either install a PPM if appropriate or use the Fuel Direct scheme to collect payments directly from certain means-tested benefits.

Ofgem stipulates that installing a PPM should only be a last resort for suppliers and it has banned installations for the most vulnerable customers such as those with severe mental health issues.

However, there have been major concerns about rule breaking, with Ofgem chief executive Jonathan Brearley acknowledging there were “troubling signs” about how some retailers were treating customers in debt following last April’s price cap rise.

Several charities including Citizens Advice, Money Advice Trust and Step Change recently wrote to Ofgem calling for the regulator to introduce a temporary moratorium on forced installations of traditional PPMs for debt.

In its report following its inquiry into the energy retail market, the Business, Energy and Industrial Strategy (BEIS) Committee called on Ofgem to hold energy companies to account to ensure they do not unnecessarily force customers onto PPMs.

Speaking during a question and answer session at Utility Week’s Consumer Vulnerability and Debt Conference on Tuesday (13 September), Thomas Brooke Bullard from Citizens Advice noted that there were “a number of commitments around moratoriums on forced prepay installations and moratoriums on disconnections” during the height of the coronavirus pandemic.

“That’s something that I would want to see again, otherwise we are going to see people really suffering and beyond suffering – people’s lives are going to be at risk if we don’t find a way of addressing that,” he said.

“Something we are seeing quite worryingly high levels of at the moment is suppliers moving to install prepayment meters and given the trends that we are seeing in terms of people’s ability to pay their ongoing usage once they are on a prepayment meter, it’s something that we really want to see a stop to.”

Brooke Bullard said the charity wants to see a temporary moratorium on forced PPM installations “at least for the coming winter”. He said the customers being put onto PPM meters are “already struggling with their ongoing usage” so it “seems pretty dangerous” to continue with the practice.

“What we would like to see is a concerted pre-action protocol that suppliers sign off on, on the steps that they will take to identify vulnerability and to understand ability to pay before considering a prepayment installation,” he added.

His views were shared by Jess Cook, project development manager for water poverty at fellow charity National Energy Action.

She said: “The point is that with these forced prepayment meter installs and yes, people could still choose to have them and that’s entirely their choice, but with the forced PPM installs we are talking about people who are struggling already with a flat rate payment.

“When you look at seasonal use, around 17% of your annual gas usage is used in January alone and December and February aren’t too dissimilar to that, around 15%. So you’re talking about three months of that year where you’re using more than 40% of your entire gas consumption for that year. The cost of that is huge.”

Cook further pointed out that PPM customers are often in properties with lower Energy Performance Certificate (EPC) ratings: “Therefore this £2,500 cap that we are talking about, which isn’t a cap because it’s based on your own usage, actually will be much higher anyway. We could be looking at £3,500 for an EPC band F, for example. So we need to be mindful of that and think prepayment isn’t going to be the best option for them.”

Responding to the comments, a spokesperson for Energy UK said: “Suppliers must have exhausted other options before installing a prepayment meter, which includes offering time to pay and alternative repayment arrangements, and they must also take into account ability to pay and whether the customer is in a vulnerable situation.”

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