More than 2 million prepayment meter (PPM) energy customers were put at “needless risk” during the pandemic as they did not have a smart meter, a report has claimed.
Maximising the smart meter rollout for pre-payment customers by fuel poverty charity National Energy Action (NEA) and its Scottish counterpart (EAS) calls for the sector to intervene and prioritise PPM customers in the rollout.
Among its recommendations are the extension of the price cap until at least the end of the smart meter rollout in 2025 and ensuring PPM customers have the right to have a smart meter installed beyond the rollout deadline.
It highlights the difficulties faced by those on a PPM meter which it says have been exacerbated by the pandemic, such as having to physically leave the house to top-up during lockdowns. Other issues include the ability to self-disconnect and the lack of physical accessibility to the meters.
It further identifies key barriers to uptake of smart meters, such as a lack of smart prepay tariffs that reflect the lower cost to serve, customer inertia in requesting the devices and a lack of awareness of the benefits of smart prepay, as well as a poor experience of the rollout by some.
It estimates that if all non-smart PPM customers upgraded, there would be a total lifetime benefit of £5 billion for those households and a further £1.4 billion to energy suppliers.
Additionally concentrating on PPM households will facilitate a reduction in 0.2THh/ year in gas use, and 0.41TWh/year in electricity use, amounting to 130,000 tonnes of CO2 saved per year, while contributing 10,000 jobs to the economy.
The report’s key recommendations include the introduction of a mechanism to reward the replacement of legacy PPMs by setting specific upgrade targets. They also call for Ofgem to strengthen the new and replacement meter obligation which stipulates all meters should be replaced by smart at the end of their life.
To this end when a legacy meter is moved due to it being in an inaccessible location, it should be replaced with a smart meter. In addition, suppliers should regularly report to Ofgem how many legacy PPMs they do install in an “open and transparent way”.
Other recommendations include that Smart Energy GB boost the awareness of accessible in-home displays (AIHD) to help those with additional needs. Ofgem should direct suppliers to offer an AIHD to households on the priority services register when they request a smart meter.
Elsewhere the supplier benefit should be shared with households once the barriers to the rollout are removed. Specifically, BEIS should implement a rule that suppliers could offer cashback to households receiving a smart meter, sharing the supplier benefit in a 50/50 split, in the form of free credit on a PPM account.
Extending the price cap
The report also calls on Ofgem to extend the price cap, currently due to end in 2023, at least for all PPM households until at least the next phase of the smart rollout is complete in 2025. It explained that the cap ensures PPM customers pay a fair price for their energy and that suppliers are prevented from making excess profits from PPM tariffs.
However, it warns, price caps should not be in place indefinitely in order to solve an issue where the technology already exists as a solution. Therefore the government should commit to a post-2025 approach to replacing legacy PPMs with smart meters, where customers who have not yet received a smart meter are given the right to have one installed beyond the end of the obligation.
Responding to the report, a BEIS spokesperson said: “The rollout of smart meters is a national infrastructure upgrade that will make our energy system cheaper, cleaner and more efficient.
“While the pandemic has had an understandable impact, the rollout is making good progress, with 24.2 million smart meters now installed.”
Meanwhile an Ofgem spokesperson said: “Ofgem will carefully consider these proposals as part of our continued focus on supporting and protecting consumers in vulnerable situations.”
Report author and head of policy at NEA, Matthew Copeland, said: “Our findings are stark. There is clear evidence vulnerable energy customers with older ‘pay as you go’ meters were put at needless risk during the pandemic.
“These customers have faced a torrid time during the last 18 months. During successive lockdowns they have faced extra difficulty, needing to leave the safety of their homes to top up, just to keep their lights on and their families warm.
“This danger and extra difficulty could have been prevented with the rollout of new smart meters for these customers.”
Frazer Scott, chief executive of Energy Action Scotland (EAS) and co-author of the report, said: “As well as targeted steps to boost awareness of the technology and incentivise its uptake, National Energy Action and Energy Action Scotland want to see the UK government and Ofgem introduce specific targets for replacing legacy prepayment meters.
“Replacing the millions of outdated prepayment meters will clearly take time and those with old technology must be protected from higher prices in the meantime.
“Prepayment customers must remain our priority and prices for prepayment users must remain capped, until all prepayment households have received a smart meter.”
Robert Cheesewright, director of communications at Smart Energy GB, said: “Getting smart prepayment meters can be life changing for households. We must make sure low-income, vulnerable and prepay customers benefit from smart meters and the rollout.
“We welcome NEA and EAS’s proposals on how this can be achieved and want to work with them, the UK government, regulator, and industry to ensure everyone who prepays for their energy benefits from smart meters.”