Tens of thousands of UK energy customers are set to receive compensation payments of up to £1,000 following a regulatory review into the forced installation of prepayment meters. The payouts come after energy suppliers were found to have switched vulnerable customers to prepayment methods without their consent.
The controversy highlighted widespread failures in how some energy firms managed debt recovery, prompting Ofgem, the energy regulator, to intervene and enforce changes across the sector.
Background of the Prepayment Meter Scandal
The issue surfaced two years ago amid a sharp rise in energy prices, which left many customers struggling to pay their bills. According to Ofgem, energy suppliers switched customers onto prepayment meters—requiring upfront payment for energy—often without agreement.
This switch was sometimes done remotely by altering smart meters or through physical installation, occasionally involving forced entry into homes.
Ofgem’s review, covering January 2022 to January 2023, found that suppliers fell short of required standards in their treatment of customers. The regulator suspended all forced installations and launched an investigation into the practices, particularly spotlighting British Gas after agents reportedly used court warrants to enter homes forcibly.
Energy UK, representing suppliers, stated that while involuntary installations had been a last resort after attempts to manage debt failed, firms recognised the need to improve processes and customer treatment.
Tim Jarvis, Ofgem’s director general of markets, said, “Our priority has been to put things right for those who weren’t treated properly, and ensure we don’t see bad practice repeated.”
Compensation Details and Regulatory Reforms
Energy companies are committing over £70 million in compensation and financial support for affected customers. Payments range from £40 to £1,000 depending on the severity of treatment and adherence to procedures. The highest payouts target customers who experienced inappropriate or forced installations.
Ofgem confirmed that eight suppliers—Scottish Power, EDF, E.ON, Octopus, Utility Warehouse, Good Energy, Tru Energy, and Ecotricity—are distributing these funds.
These firms had already provided £55 million in support, with a further £5.6 million in direct compensation and £13 million allocated to write off debts related to forced meter installations.
Investigations continue into British Gas, Utilita, and Ovo, which could result in additional compensation. A new code of practice now mandates stricter conditions for installing prepayment meters without customer consent. Firms must consider vulnerable customers’ circumstances, such as age, health, and presence of young children, before proceeding with such installations.
Dhara Vyas, chief executive of Energy UK, emphasised that involuntary installations were only undertaken when all other debt recovery efforts failed. Meanwhile, Citizens Advice chief executive Dame Clare Moriarty called for swift compensation payments to those most affected, noting the distress caused by these practices.
The regulatory response aims to prevent recurrence and protect vulnerable consumers, reinforcing accountability in the energy sector amid ongoing financial pressures on households.
