Over 200,000 customers could be forced onto PPMs this winter

Citizens Advice has warned almost a quarter of a million customers could be forced onto prepayment energy meters (PPMs) by their supplier this winter, as more struggle with debt.

The consumer charity issued the warning in a report ahead of the Energy Price Guarantee coming into force tomorrow (1 October), a move which caps unit rates at £2,500.

Analysing Ofgem data and average UK household size, the charity predicts more than 450,000 consumers could be forced to move to a PPM due to struggling with debts this year alone.

More than 225,000 could be put on PPMs between October and March which, it added, puts them at risk of self-disconnection this winter.

It said the number of people contacting the charity because they have been forced onto a PPM has soared by 138% in the last two years .

The report said there are currently 4 million customers on PPMs and due to their higher costs to serve, they will need to spend £1.73 billion more this winter than they did last winter.

Overall they will be spending £1 billion more than direct debit customers this winter.

While there is already a ban on disconnecting some customers between October and March, Citizens Advice said that suppliers are moving consumers onto PPMs who might have been protected.

“If these customers cannot afford to top up, then they will self-disconnect. Forcibly moving customers onto prepayment meters is quickly becoming a way to disconnect customers without technically breaking the rules,” it added.

While it acknowledged retailers are taking steps to help their customers, it said the current licence conditions do not go far enough to meet the needs of households in crisis this winter.

As such, it called for the government to step in and stop retailers forcing people onto PPMs, if such a move means that the customer is likely to self-disconnect. It reiterated calls for a temporary moratorium on forcibly moving people to traditional prepayment meters, and on switching smart meters to prepay, in an attempt to recover debt.

This, it said, should remain in place until April 2023.

In the meantime, suppliers should instead work with customers to establish affordable repayment plans during the winter months.

“The Energy Price Guarantee gives suppliers security at a time of skyrocketing prices. However, we know that average £2,500 bills are still too expensive for many and that in reality bills may be even higher. Suppliers should be passing this security onto customers by preventing the worst impacts of debt,” the charity added.

‘Disconnection by the backdoor’

Clare Moriarty, chief executive of Citizens Advice, said: “Energy companies have a duty to protect customers, but forcibly moving people in debt onto prepayment meters is disconnection by the backdoor.

“Even with the bill freeze in place, the cost of energy will still be at a record high. If people can’t afford to top up, they’re at real risk of the heating going off and the lights going out.

“The government must bring in a winter ban to stop energy companies forcing people already struggling onto prepayment meters. It should also bring in targeted support to help people on the lowest incomes pay their bills.”

Child health warning 

Meanwhile, National Energy Action (NEA) and the Food Foundation have published a joint briefing on how the cost of living and energy crises are impacting children’s health.

The note said that despite the measures announced by the government earlier this month, those who are struggling will require “deeper, targeted support”.

It said: “Overall, despite the freeze on bills and the ongoing commitment to the £400 rebate, average energy bills will have almost doubled from the start of October since this time last year (end of September 2021).

“Based on the 10% measurement of fuel poverty, we estimate that 6.7 million households across the UK will still be trapped in fuel poverty this winter, including well over a million households with a child under five.

“In addition, to date the UK government has not taken enough action to boost the level of assistance provided by the welfare system, given the soaring level of inflation.”

A survey of more than 4,000 households conducted by YouGov on behalf of the two organisations found one-quarter (24%) of parents have already cut back on the quantity of food to afford essentials such as their energy bills since the beginning of the year, while 28% say they have cut back on the quality.

More than one in ten parents (13%) have eaten cold meals or ones that don’t require cooking to save money on energy bills.

The briefing outlines 5 urgent actions for the government:

• Boost incomes by increasing Universal Credit and other legacy benefits in line with inflation
• Introduce a new social tariff to lower the cost of energy bills for low income households
• Reduce needless energy consumption by enhancing investment in domestic energy efficiency
• The Healthy Start scheme should be urgently expanded and strengthened
• All children living in households receiving Universal Credit should receive FreeSchool Meals

NEA chief Adam Scorer said: “Energy bills almost doubling in a year is unaffordable for millions and our survey shows people are already cutting back on the quality of what they eat as well as the quantity.

“The impacts on health and wellbeing are devastating and will only get worse after Saturday’s price rises. It’s a public health emergency. More targeted and enduring support, like an energy social tariff, is crucial if the most vulnerable are to get through winter warm and fed.”

Laura Sandys, chair and founder of The Food Foundation, said: “For this winter, it may no longer be a question of heating or eating for many households; the cost-of-living crisis and energy bill increases will see children living in homes where there is no longer that choice – they will both go hungry and be cold.

“Government must support low-income families to ensure that children can be warm and well-fed.  The implications of not addressing this double whammy will last longer than the winter, with children’s physical, mental and academic growth stunted, impacting those with the least most.”

The cost of living crisis and the sector’s responsibility to mitigate it will be one of the key themes at Utility Week Forum on 8-9 November in London. Find out more here.