Ofgem says there was more than a threefold rise in the number of smart meters switched remotely by suppliers from credit to prepayment mode in 2018.
The energy regulator’s vulnerable consumers report published today (25 September) found cases of remote switching rose from 21,000 in 2017 to 70,000 last year.
As a result Ofgem says it is “concerned” that some suppliers may be remotely switching smart meters to prepayment (PPM) mode to collect debt inappropriately and without the customer’s active choice.
Under Ofgem rules suppliers can only install prepayment meters to collect debt where they have checked that it is appropriate for customers to pay by this method.
Installing meters by force must be a “last resort” for suppliers.
In response to the findings Matthew Vickers, chief executive at the Energy Ombudsman, said: “While this report highlights certain improvements, it’s worrying that some suppliers are seemingly switching smart meters to prepayment mode without the customer’s consent.
“Smart meters shouldn’t be used to facilitate a digital version of the forced entry that we see in the analogue world.
“It’s also a concern that some suppliers are not moving quickly enough to put customers who owe money on repayment plans.
“We think it’s vital that all energy suppliers focus on ensuring that customers in vulnerable circumstances get the help and support they need.”
Meanwhile, the number of prepayment meters installed forcibly by suppliers under warrant to collect a debt fell by 15 per cent to 71,000 in 2018, after Ofgem introduced new rules to encourage suppliers to cut down on the practice.
The drop, Ofgem said, was mainly driven by British Gas, which it engaged with as part of last year’s report.
Despite the drop, the regulator says it is concerned about a high number of forcible meter installations carried out by First Utility (now Shell Energy) and Utility Warehouse in 2018.
For example First Utility installed 89 and 104 PPMs under warrant per 1,000 customers for electricity and gas respectively and Utility Warehouse installed 85 and 99 PPMs under warrant per 1,000 customers.
The average number of PPMs installed under warrant per 1,000 customers across all suppliers was 44 for electricity and 52 for gas in 2018.
Ofgem did however reveal that First Utility did not carry out any forcible installations in the last quarter of last year. Utility Warehouse has reduced its number but it still remains one of the highest of suppliers.
In response a spokesperson for Shell Energy said:”Installing a PPM is always a last resort after we’ve exhausted all other avenues to support a customer who’s in debt.
“In the last 12 months we’ve put a strong focus on more quickly helping customers who’ve found themselves in debt by offering advice and bespoke payment plans.
“That proactive approach has already led to much lower debt overall and a reduction in the level of forced PPM installs.”
The report also highlighted that the number of energy customers in debt increased in both electricity and gas.
In total, there were 1.31 million electricity customers and 1.05 million gas customers in debt last year, representing an increase of 4.2 per cent and 4.8 per cent respectively.
While the number of indebted customers on repayment plans rose slightly last year – 1 per cent for electricity and 0.4 per cent for gas – this was outweighed by the increase in the number of those who owed money but were not put on any plan – a rise of around 8 per cent for electricity (648,000) and 10 per cent for gas customers (505,000).
Ofgem says this suggests that suppliers are not moving “quickly or efficiently” enough to put customers who owe money on repayment plans, potentially pushing them further into debt or hardship.
Other findings of the report were more positive and the regulator revealed that the number of disconnections for debt also fell to a record low, with just six electricity disconnections and none for gas.
Furthermore, 1.5 million additional services were provided by suppliers for vulnerable customers – 850,000 and 650,000 to electricity and gas customers respectively.
This represents an 8.5 per cent increase for electricity and 4.4 per cent for gas services from the previous year.
Mary Starks, executive director for consumers and markets at Ofgem, said: “Energy is an essential service, and suppliers must take particular care with those customers who are less able to manage and pay for their energy.
“We are pleased that suppliers are making such good progress on getting extra help to vulnerable customers that need it, for example by making their bills easier to access or read.
“However, some suppliers are simply not keeping up with the rising numbers of customers who owe them money.
“It’s imperative that suppliers move quickly and efficiently to help struggling customers manage paying back their debts, or risk pushing them further into hardship.”