Ofgem has announced a £150 cap on charges for installing pre-payment meters under warrant for customers in debt, and banned charges for the most vulnerable. Suppliers can apply to the court and install a prepayment meter under warrant, as a last resort when customers fall into debt. Under current rules, suppliers can charge warrant costs back to affected customers. These charges, which can include court costs, are on average £400 for a dual fuel customer but can range up to £900 and risk pushing these customers further into debt.
Following consultation, Ofgem has announced measures to protect consumers from unnecessary hardship due to having a prepayment meter installed under warrant. As well as the cap, these measures prohibit suppliers levying any prepayment meter warrant charges, and banning these installations entirely, for the most vulnerable customers. This includes, for example, prohibiting charges for people in severe financial difficulty, and banning installations entirely for people for whom the experience would be severely traumatic, for example, due to mental health issues.
Rachel Fletcher, Ofgem’s senior partner for consumers and competition, said: “Protecting vulnerable customers is a priority for Ofgem. At the moment vulnerable customers face a double blow when they’re hit with high warrant charges on top of existing debt – risking making their situations worse. The measures will protect all consumers, including the most vulnerable, from experiencing unnecessary hardship due to having a meter installed under warrant.”
“We want to send a strong message to suppliers that using a warrant to install a PPM is a last resort. They must step in early to help customers manage debt through repayment plans.”
In April, Ofgem introduced a safeguard tariff to protect customers on prepayment meters overpaying for their energy. Last month Ofgem announced it would extend this safeguard tariff to 1 million vulnerable customers in February. There are plans to extend this safeguard tariff to a further 2 million vulnerable customers next winter, depending on the timing of the Government’s cap on standard default tariffs.
The measures will take effect from January next year.
Commenting on the changes, Joanna Elson OBE, chief executive of the Money Advice Trust said “Ofgem’s decision is a welcome one as it provides further protection for energy customers who may be in a vulnerable situation. Installing a prepayment meter under warrant is often a traumatic experience which can leave people with a larger debt to repay. These new rules provide a strong incentive for all energy suppliers to make every effort to identify and support people in debt.”
“We know that many energy suppliers take their duty to treat customers fairly when they fall behind with payments seriously. It is however important that all companies understand their obligations, particularly with regard to customers in vulnerable situations. To support energy suppliers, we have produced, alongside Energy UK, a practical guide to help companies identify and support customers in vulnerabl”e situations. We look forward to continuing to work with energy companies to help improve practice in this area.