Ofgem proposes cap on prepayment meter costs
The energy watchdog Ofgem has proposed a cap on charges for installing prepayment meters to help protect vulnerable customers. The regulator said it wants a "firm limit" of £100 or £150 on the cost of installing the meters under warrant (without customer permission) - an option used when customers fall into debt.
From April 2017, customers who use prepayment meters will be protected by an interim price cap, which will save them about £75 a year. Companies currently charge an average of £400 but the fees have been reported to leave some of the most vulnerable customers up to £900 deeper in debt.
Ofgem is also proposing a complete ban on levying the charges against the most vulnerable customers, including those in hardship or struggling with physical and mental health issues or learning difficulties.
Under current rules, suppliers can charge warrant costs - which can include court costs - to affected customers. Last year, about 86,000 meters were installed under warrant and customers faced an average bill of £400, risking pushing them more into debt.
Comment from Ofgem's Senior Partner for Consumers and Competition
Ofgem Senior Partner for Consumers and Competition said: “It’s deeply unfair that struggling customers get hit with high warrant costs when they're already grappling with debt, doubly penalising them. Ofgem's role is to protect every consumer, including the most vulnerable.
"Suppliers need to ensure that prepayment meters are only installed under warrant as an absolute last resort. Where they are needed, our proposals will protect customers by limiting warrant charges for all customers and removing them for the most vulnerable.”
Kathie Clark, who leads Turn2us’ vulnerable customer work, commented: “We welcome these new proposals from Ofgem aimed at helping to protect the most vulnerable. Our No Cold Homes campaign research last year found that one in two low income households are struggling to afford their energy costs, despite being in work. Worryingly, of those households struggling with energy costs, nearly half (48%) had done so for more than a year.
"As part of our vulnerable customer strategy, we are working with energy and utility companies to support those most at risk of fuel poverty. If you, or someone you know, is struggling with energy costs, please use our free online tools to find out what support is available.”
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