Ofgem orders suppliers to tackle £1.4bn annual energy theft

Ofgem has urged suppliers to do more to help tackle increasing levels of energy theft.

The regulator has written an open letter to all retailers reminding them of their obligations to identify and confirm cases of energy theft.

Ofgem is also launching a review to better understand the current performance of suppliers with existing licence and code obligations in relation to the prevention and detection of energy theft.

The cost of energy theft in Great Britain is estimated to be between £830 million to £1.38 billion per year which equates to an additional £29-48 annually on each domestic consumer’s energy bill.

Energy theft reports have increased considerably, with more than 12,000 reports to Crimestoppers in the 12 months to April 2023 compared to approximately 8,000 reports in the 12 months to April 2022.

Ofgem’s letter adds that the “increase in reports suggests the prevalence of energy theft is increasing and will likely lead to a higher financial burden on consumers”.

“Outside of the financial impact on consumers, theft can have serious implications in terms of health and safety,” the letter states. “Tampering with energy meters can have serious consequences even being a potential risk of serious injury or to life. A 370% increase in metering equipment interference was reported in incidents between 2017 and 2021.

“Suppliers are obligated to prevent and identify instances of energy theft and Ofgem expects suppliers to ensure that appropriate metering arrangements are in place for their consumers.”

Despite the rise in cases reported to Crimestoppers, Ofgem notes that suppliers are falling short of their targets to identify theft cases.

In 2021/2022, 17,423 thefts were identified and confirmed by suppliers against an overall target of 41,000 which equated to a target achievement of 42%. In 2022/2023, 16,581 thefts were identified and confirmed by suppliers against an overall target of 41,000 which equated to a target achievement of 40%.

Ofgem’s letter adds: “We are disappointed in the overall performance of suppliers in identifying and confirming cases of energy theft given the significant health, safety, and financial implications of energy theft on consumers.

“We expect to see suppliers not only comply at minimum levels, but to make concerted efforts to reduce the overall amount of energy theft in GB and its subsequent financial and health burden on consumers by taking proactive and intensive action to prevent and identify incidences of energy theft.

“We would like to remind suppliers that code obligations are not guidelines, such as the meter read performance in the UNC, but obligations.”