Ofgem should not change its debt allowances mechanism so that suppliers can recover costs associated with the ban on forced prepayment meter (PPM) installations, according to the government’s advisor on fuel poverty.
The Committee on Fuel Poverty claims that putting such an adjustment in place would “effectively be penalising all consumers for the failings of their suppliers in their treatment of some of the most vulnerable among them”.
Following major allegations against British Gas over its warrant activity suppliers agreed to stop forced installs in February, with the senior presiding judge of England and Wales later ordering magistrates to stop processing warrant applications made by retailers.
Since the introduction of the moratorium, Ofgem has been strengthening protections for PPM customers and has since introduced a mandatory code of practice for suppliers.
Ofgem estimates that the effective ban on PPM installs has added around £25 million per month in additional debt-related costs since February.
To tackle the mounting debt pile, the regulator is consulting on changes to debt allowances. This includes a proposal to adjust the allowances mechanism to cover costs associated with the moratorium on involuntary PPM installations.
In its submission to the consultation, the Committee on Fuel Poverty adds: “These supplier costs should not be included in the adjustment.
“The moratorium had to be put in place because Ofgem was unable to satisfy itself that energy suppliers were treating some of their most vulnerable customers fairly.
“The secretary of state made clear that he expected more of suppliers. The new rules introduced by Ofgem, which we support, are hardly revolutionary – they are steps (such as leaving customers on supply at the end of an involuntary installation) any supplier, intent on putting their customers at the centre of their business, might reasonably have been expected to be taking already.
“To put in place an uplift for additional costs incurred during the moratorium would be to pay suppliers for failing to satisfy the regulator, the secretary of state and the public more generally. It would pay suppliers for introducing new policies they might reasonably have expected to have had in place already.”
Suppliers are now permitted to restart forced PPM installations, so long as they meet all conditions set out within Ofgem’s code of practice.
Last month, Scottish Power successfully applied for 124 warrants to install PPMs.
However, it has since come to light that at least two of those warrants relate to households with young children – which the code of practice prohibits forced installs.
The news has prompted an intervention by energy security secretary Claire Coutinho, who has written to Scottish Power’s chief executive Keith Anderson.
In her letter to Anderson, she said: “It is your duty to ensure you have taken all practicable steps to assess the vulnerability of households. In this case I understand you made at least 10 attempts to contact the customers and ascertain their situation. I know we will both agree that the last thing any of us want, is a repeat of the abhorrent practices that took place last year.
“The previous secretary of state wrote to you in January and February this year on the importance of protecting your most vulnerable customers, and as I said to you on our call yesterday, my view is exactly the same. The unacceptable practices we saw earlier this year cannot happen again and I expect you to be taking your duties seriously.”
After the issue was brought to light, Scottish Power added the customers to the Priority Services Register, cancelled the warrants and has said it will work with them to agree an affordable repayment plan.