Energy UK has said a new code of practice for suppliers around forced installations of prepayment meters (PPMs) will give customers reassurance but also exacerbate already “unsustainable” levels of bad debt.
The trade body was responding to the launch of a new voluntary code of practice which compels suppliers to “refrain from involuntary installations” of PPMs for the highest risk customers, including those over 85, people with severe health issues or people who cannot top up because of physical or mental incapacity.
Companies will also be expected to make at least 10 attempts to contact a customer before a PPM can be fitted, as well as carrying out a site welfare visit. Companies will then need to re-assess the case once the customer has repaid their debts.
Other stipulations include the need for audio or body cameras to be worn during installations or welfare visits and automatically applying £30 credit to meters installed under warrant.
All suppliers have signed up to the voluntary code with Ofgem due to consult on incorporating it into licences.
Even with the code in place, the regulator is demanding that retailers meet a series of conditions before restarting warrant installs. These include carrying out an independent audit to identify wrongly installed PPMs, with compensation offered, and the development of a change plan.
The recommencement of forced installs is also predicated on Ofgem’s market compliance review on PPMs not identifying major concerns.
Ofgem chief executive Jonathan Brearley said: “This new Code of Practice means, for some people, PPMs should never be installed, and, for high-risk groups, their energy needs must be protected with a higher level of consideration. The code requires suppliers to become more attuned to the needs of all their customers in vulnerable situations, including if their circumstances change and reassessing if or when they do, and apply better compassion and professional expertise.
“We expect the overall number of involuntary PPM installations will fall over time, and we recognise that a careful balance is required to help manage debt, while protecting customers in vulnerable situations. So, this code, whilst an important next step, is not the end of the journey.”
Brearley added that the regulator would continue to monitor the situation and stressed that it was also targeting wider affordability issues and a “move towards a sustainable, longer-term solution to ensure energy needs are affordable for all consumers, such as a social tariff and, eventually, cheaper, renewable, homegrown energy for all”.
Energy UK chief executive Dhara Vyas said: “While involuntary PPM installations are necessary to prevent debt building up further and to minimise additional costs for all customers, the new Code of Practice should give reassurance that it will be done only as a last resort, with the proper consideration and support, and only in circumstances where it is safe to do so.
“Bad debt within the energy industry is increasing to unsustainable levels. As Ofgem acknowledges, the new process will lead to fewer installations by warrant and so it’s likely customer debt will increase even further as a result – as well as from the current pause – which will need to be addressed.”
Vyas welcomed moves to end the PPM standing charge premium but added “this issue also underlines how important it is to make bills affordable for all customers in future”.
She added: “As well as protecting customers from high prices through a combination of targeted financial support – such as a social tariff – access to energy efficiency measures and overdue retail market reform, building more cheap, domestic, renewable energy will help to bring down prices in the long term.”