Thousands of UK households are set to receive compensation from their energy suppliers following a major regulatory investigation into industry practices.
The probe uncovered serious failings in how certain companies approached the installation of prepayment meters (PPMs), particularly in cases where meters were fitted without customer consent.
This development follows a wide-reaching review by Ofgem, the national energy regulator, aimed at ensuring fair treatment for vulnerable customers.
According to a report by the Manchester Evening News, the redress scheme could affect tens of thousands of households, many of whom were placed under financial strain after being switched to pay-as-you-go energy systems.
Review Reveals Significant Shortfalls in Supplier Conduct
A comprehensive compliance review by Ofgem revealed that up to 40,000 households had PPMs installed without consent, either physically under warrant or through remote switching of smart meters. These actions took place during the assessment period from January 1, 2022 to January 31, 2023.
The affected suppliers — Scottish Power, EDF, E.ON, OVO, Utility Warehouse, Good Energy, TruEnergy, and Ecotricity — have agreed to a redress package worth £5.6 million in compensation and £13 million in debt cancellations. These measures add to the £55 million in hardship payments and previous debt write-offs issued by suppliers prior to the review’s conclusion.
Customers do not need to take action to receive compensation; suppliers will reach out directly to those affected.
Ofgem Calls for Industry-Wide Reforms
In one of the most detailed regulatory reviews in its history, Ofgem examined tens of thousands of cases. Tim Jarvis, director-general of markets, stated:
This has been one of the most detailed reviews of supplier practices in Ofgem’s history, looking at tens of thousands of cases.
It has taken time, but our priority has been to put things right for those who weren’t treated properly, and ensure we don’t see bad practice repeated.
Jarvis noted that even if the number of wrongful installations is small relative to the total PPM customer base, “one case is one too many.”
He continued:
Our review also found wider issues with the processes suppliers had in place, which is why we’ve put in place clearer, tougher rules to protect customers in vulnerable situations, and I’m pleased that from today suppliers will be applying our compensation framework for those customers affected and have also committed to further support such as debt write-off.
We have made our expectations clear to suppliers on how those customers who were treated poorly should be compensated.
We know that PPMs can be an effective tool in helping customers manage their costs and debt.However, customers must always be treated fairly and compassionately, and we are confident that the changes we have made are a significant step to ensure that happens.”
Tougher Rules and Audit Requirements Now in Force
Following the review, Ofgem implemented a strict set of conditions suppliers must meet before resuming involuntary PPM installations. This followed a temporary ban that had been in place during the investigation.
These conditions include:
- Completing independent audits to identify all wrongfully installed PPMs.
- Offering alternative non-prepayment options and compensation to affected customers.
- Submitting regular monitoring data to ensure continued compliance.
These audits are a mandatory prerequisite for suppliers to resume any PPM-related enforcement.
