A government minister pushed back against calls to introduce a mandatory ban on the forced installation of prepayment meters (PPM) just days before revelations at British Gas came to light, Utility Week can reveal.
Meeting minutes obtained via a Freedom of Information request show that energy minister Graham Stuart was particularly concerned that introducing a mandatory moratorium on forced PPM installations would result in an increase in customers refusing to pay their bills.
During a meeting with suppliers held on 25 January (see timeline below), Stuart stressed that he didn’t “want to create system where people can take advantage of system” when speaking about the introduction of a “firm moratorium on forced installation”.
He also expressed concerns about the impact a moratorium would have on the financial resilience of the sector, especially in light of the Bulb collapse.
Stuart made the comments just three days after a government press release quoted then-energy secretary Grant Shapps calling on suppliers to voluntarily stop the practice of forced prepayment switching.
The minutes from the 25 January meeting also reveal that suppliers put up resistance to the introduction of a ban on PPM warrant activity.
While the minutes are anonymised, the list of attendees includes Energy UK, Scottish Power, Ecotricity, Utility Warehouse, Utilita, Octopus Energy, E, Eon, So Energy, Ovo, Good Energy, EDF Energy, Shell Energy, Centrica, and Outfox the Market.
The meeting notes state that suppliers were “nervous about moratoriums and concerned about supplier failure and having to collect debt from customers”.
However, a moratorium effectively banning the practice was introduced in early February following The Times investigation into British Gas which was published just one week after the meeting took place between Stuart and suppliers.
Ofgem has since estimated that the effective ban on PPM installs has added around £25 million per month in additional debt-related costs since February.
However, the regulator has also since confirmed that Stuart’s “can pay, won’t pay” fears have not materialised.
Commenting on the matter, a Department for Energy Security and Net Zero spokesperson said: “All suppliers must adhere to Ofgem’s strict new licence conditions and abide by the exemptions for vulnerable people, including for households over 75 years old and for families with children under two.
“We have been unequivocal with Ofgem and suppliers about their responsibilities and will continue to monitor the situation closely.”
The concept of a moratorium on PPM installations had been gaining momentum in the months leading up to The Times sting.
In August last year Citizens Advice, the Money Advice Trust and Step Change wrote to Ofgem saying that to prevent PPM customers from self-disconnecting over winter, the regulator should introduce a temporary moratorium on forced installations of traditional PPMs for debt.
Several weeks later Thomas Brooke Bullard, senior policy researcher at Citizens Advice, said “lives are going to be at risk” if the issue was not addressed ahead of the winter.
However, it was not until after the investigation by The Times was published on 1 February that most suppliers began to halt their PPM warrant activity, with Ofgem chief Jonathan Brearley writing to retailers asking them to do so on 10 February.
Prior to Ofgem’s intervention, several major energy suppliers had proactively paused their warrant activity including EDF, Scottish Power and Eon. Octopus also confirmed it was not installing any of the devices.
Ovo Energy meanwhile suspended its warrant activity last November.
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.
The regulator has also been carrying out a market compliance review into the practice, but has yet to publish its final report.
In October it emerged that Scottish Power had successfully applied for PPM warrants, with courts running pilot schemes to test the application process.
Timeline of events
- 22 January – Government press release quotes Grant Shapps calling on suppliers to voluntarily stop the practice of forced prepayment switching
- 25 January – Graham Stuart holds meeting with suppliers
- 1 February – The Times publishes investigation into British Gas
- 6 February – Courts ordered to stop processing PPM warrants in England and Wales
- 10 February – Ofgem chief Jonathan Brearley writes to retailers asking them to voluntary pause forced PPM installations