Energy regulator outlines next steps on forced Prepayment Meter (PPM) installations

• Ofgem CEO calls on suppliers to check their recent forced and remotely switched PPM installations and consider removal and compensation where rules were not followed 

Britain’s energy regulator, Ofgem, has today (Tuesday 21 February 2023) set out the next steps in the British Gas investigation and Prepayment Meter (PPM) review to support and protect energy customers when suppliers fit PPMs by force or via remote switch.  

Ofgem CEO, Jonathan Brearley, has also called on all suppliers to use the pause in installations (lasting until 31 March 2023) to review all of their recent forced and remotely switched PPM installations, and consider if any need to be reversed, and compensation offered where the strict rules have not been followed.  

The regulator has today announced:  
   

• The terms of reference of the urgent investigation into British Gas (see notes to editors)  
• The scope of the in-depth Market Compliance Review into the issue of how PPMs are handled across the market (see notes to editors), to include targeted engagement - facilitated through consumer groups and the Energy Ombudsman
• A call for all suppliers to use the current pause in PPM installations to proactively check if any have been installed incorrectly and, if so, to consider removing them and offering compensation where appropriate. Ofgem will be checking actions but has made clear that suppliers should not wait to act themselves. 
• The launch of urgent work with stakeholders to look at what further protections may be needed within the rules, regulations and guidance around PPMs and seek views on other measures that could reduce the need for PPMs to be installed or switched to remotely, to conclude by the end of March 2023

Jonathan Brearley, CEO of Ofgem, said:  

“As a result of the unprecedented surge in energy prices, households across the country are facing significant energy bills and this has meant many are finding themselves in debt and being forced onto prepayment meters (PPMs). I am concerned about the way customers in already distressing situations are being treated when suppliers force them onto PPMs. That’s why, today, we have set out further details on the two investigations, one into British Gas for potential breaches that have been alleged indicating that something went very badly wrong at British Gas and the other into PPMs across all suppliers to assess whether this is an isolated case. 

 “The rules and regulations are clear that installing forced PPMs should only be done as a last resort and only where it is safe and practicable to do so. We expect suppliers to treat customers with compassion and professionalism and those executing a warrant should take into account what they find when they visit a home and pause the installation if they see a safety risk. Where this hasn’t happened, we will hold suppliers to account.  

However, I’m telling suppliers not to wait for the outcome of our reviews and to act now to check that PPMs have been installed appropriately, and if rules have been broken, offer customers a reversal of installations and compensation payments where appropriate. There will also be fines issued from Ofgem if the issue is found to be systemic. 

“We are taking this issue extremely seriously and customers should feel reassured that where the rules have been broken, Ofgem will act.”   

Ofgem issued a Provisional Order to British Gas at the start of this month temporarily banning them from doing any forced installation or remote mode switch. This followed undercover reporting from The Times which alleged appalling behaviours from the company in the treatment of customers when forced PPMs were being installed, and enough doubt was raised of potential rule breaches. Ofgem also made an agreement with all other suppliers to voluntarily suspend forced installations of prepayment meters and remote switching of smart meters to prepayment mode until 31 March 2023.  

Ofgem has also today set out the scope of a new in-depth Market Compliance Review (MCR), announced in January, focused on forced installation and remote mode switch. Alongside this, Ofgem is also bringing together suppliers, consumer groups and charities to look at what further protections could be introduced within the rules, regulations and guidance around PPMs and seek views on other measures that could reduce the need for PPMs to be installed.  

The PPM market-wide review will also conduct targeted engagement - facilitated through consumer groups, the Energy Ombudsman and customer feedback. Ofgem will be seeking views from all interested parties on the licence conditions and guidance that covers the use of PPMs, including identification of vulnerabilities by suppliers, safe and reasonably practicable rules and processes in place for installing or switching customers to PPM, as well as asking for views on other measures that could reduce the need for PPM to be installed in the first place.  

Ofgem wants to see a market where no customers are forced onto PPMs if it is not safe for them and where suppliers consistently protect their vulnerable customers. This includes suppliers reliably identifying any relevant vulnerabilities and having processes and practices for installation of (or switch to) PPMs that are fair, clear and effective. Ofgem’s intent is that the regulatory rules and guidance should provide a robust foundation for these outcomes.  

  
Previous market-wide reviews  

Previous market-wide reviews by the regulator have driven industry-wide improvements in, among other things, the way customer direct debits are handled and set, as well as engaging with all suppliers on concerns which included monitoring risk of vulnerable customers, strengthening governance around processes and controls and making improvements around their Priority Service Registers.  

The last market review into customer service found that Ofgem’s findings tallied with what customers themselves were reporting, with early indications from a recent Energy Satisfaction survey of 3,000 domestic energy consumers showing that in November-December 2022, overall customer satisfaction with energy suppliers was amongst the worst ever seen since tracking began in 2018.    

This new review will now build on these previous MCRs, which examined how customers struggling with bills are treated, the support for vulnerable customers, and how direct debits are set, examined and handled.  Ofgem also flagged the risk of remote mode switching, and wrote to suppliers in November 2022 on this issue.  

NOTES TO EDITORS:  

Today’s publications: 

https://www.ofgem.gov.uk/publications/prepayment-rules-and-protections-call-evidence 

https://www.ofgem.gov.uk/publications/ofgem-approach-investigation-british-gas-trading-ltds-compliance-standard-licence-conditions-slc-slc-0-131-and-d-27-28-and-28b1-gas-and-electricity-supply-licences-announced-2nd-february-2023 

https://www.ofgem.gov.uk/publications/market-compliance-review-pre-payment-meter-practice 

  
The investigation into British Gas will examine:  

• Whether British Gas has taken all steps required under its licence to support customers in domestic households who fall into debt before taking any action to install a PPM or disconnect that customer (including providing advice on how to reduce costs, signposting to sources of debt assistance and offering alternative repayment options); 
• If, before taking any steps to install a PPM under warrant or by remote switching, British Gas and its representatives systematically assess whether it is safe and reasonably practicable to install a PPM and whether a customer’s mental capacity and/or psychological state is such that installation of a PPM would be severely traumatic to a customer and make their condition significantly worse; 
• If British Gas has taken all reasonable steps to ensure that each representative who visits a customer’s premises on the licensee’s behalf has the necessary skills – including the ability to make an assessment on the safety and practicability of installing a PPM and on assessing the mental capacity and psychological state on the doorstep – and is fit and proper to visit and enter customer premises; and 
• If customers who are subject to the forced installation of PPMs (whether under warrant or by remote switch) are treated fairly in accordance with our Standards of Conduct and that any BG representative behaves and carries out any actions in a fair, honest, transparent, appropriate and professional manner. 

The PPM market compliance review (MCR) being outlined today will examine:  
   

• Governance – how boards and senior leaders are providing direction and oversight, leading to decision making with respect to remote switching to prepayment meter and installation of prepayment meters under warrant. 
• Policies - what policies suppliers have for remotely switching a smart credit meter to a prepayment mode (remote mode switching) and fitting a prepayment meter under warrant. 
• Risk Management - what is the process of identifying vulnerability, assessing and controlling threats to customer experience and their business operation, and then having the mechanism to report them. 
• Processes – what steps are taken for embedding and implementing policies, standards and procedures, and operating activities of the firm.  
• Controls – how suppliers are ensuring that policies, procedures and processes are operating effectively using a variety of mechanisms, and embedded throughout the business process and overseen or operated by people with specific responsibilities  
• Management information – how management is monitoring and managing risks and key indicators relating to remote mode switching and warrant installations and how they anticipate future issues and prompt further analysis, decisions or actions.  
• Training programmes – how suppliers are using compulsory training and learning and advancement training pertinent to the remote mode switching and prepayment meter installations under warrant to ensure staff and third parties understand the rules, obligations, policies, and processes to deliver good consumer outcomes  
• Assurance – how suppliers gain assurance that rules are being adhered to though audits and checks (both internally and independently) over remote mode switching and prepayment meter installations under warrant. 

A prepayment meter means a customer must pay in advance for their energy by topping up a meter with a smart card, ‘key’ or cash token. Fitting these by force means that an energy supplier can enter a house using force to install the meter, after having obtained a court warrant.   

Under current rules, suppliers can move customers onto prepayment meters by force if they are behind on their bills and after all other options have been exhausted. However, for certain highly vulnerable customers, such as those with medical equipment that needs constant power, those with severe mental health problems or those who will struggle to top up their meter, the practice is banned altogether.  

Remote switching means that a customer’s smart meter is switched to PPM mode remotely by the energy supplier.  

Last month, Ofgem CEO Jonathan Brearley said in a speech to the Institute for Government that he believed there is a case for examining, with urgency, a social tariff that limits the impact of extremely high prices and reduces volatility for a defined set of vulnerable groups: Jonathan Brearley's speech at the Institute for Government | Ofgem  

Ofgem has also written to Secretary of State for Energy Grant Shapps setting out the above and outlining the scope of this market compliance review.  

Alongside Ofgem’s investigation of recent reports of poor supplier practice and launch of a Market-wide Compliance review into PPM practices, Ofgem is also reviewing the licence and associated guidance to consider whether these should be changed to further protect consumers, particularly vulnerable consumers.