Ofgem has announced a £150 cap on charges for installing prepayment meters under warrant and banned them altogether for the most vulnerable.
The regulator said the new measures will take effect from January and will help protect consumers from “unnecessary hardship”.
Under the current rules, suppliers can apply to the court and install a prepayment meter under warrant, as a last resort when customers fall into debt.
Suppliers can also charge warrant costs, including court costs, back to customers.
According to Ofgem, dual fuel customers in these situations can face an average charge of around £400, but in some instances the bill can go as high as £900.
The regulator will also ban suppliers from levying any prepayment meter warrant charges, and banning installations entirely, for the most vulnerable customers.
This includes stopping charges for people in severe financial difficulty, and banning installations entirely for people for whom the experience would be severely traumatic.
“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,” said Ofgem’s senior partner for consumers and competition, Rachel Fletcher.
“The measures will protect all consumers, including the most vulnerable, from experiencing unnecessary hardship due to having a meter installed under warrant,” added Fletcher.
“We want to send a strong message to suppliers that using a warrant to install a prepayment meter is a last resort. They must step in early to help customers manage debt through repayment plans.”
Craig Salter from Citizens Advice Scotland’s consumer futures unit, said while a cap is “certainly a step in the right direction”, imposing these kind of charges “should always be a last resort”.
Salter added energy companies should “seek to help make sure consumers don’t fall into arrears in the first place”.