Energy firms warned over leaving people without poweron November 9, 2022 at 12:44 pm

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Households with smart meters who get into debt are being switched on to prepayment meters.

Stock image of a woman and dog with smart meterImage source, Getty Images

A rising number of households are having their energy smart meters remotely switched to prepayment meters, the energy regulator has said.

Energy firms can use the technology to swap customers who are in debt to the more costly plan without needing their permission.

It can leave customers, who need to top up, at risk of running out of energy.

Ofgem said it had received reports of “vulnerable customers being left without power for days or even weeks”.

Kelly from South London told the BBC she suddenly found she “only had £3” left on her electricity meter until payday after being switched remotely.

‘Disconnection by the backdoor’

Once a smart meter is installed, it is a much simpler process for a supplier to swap the customer into prepay mode at the push of a button, rather than having to apply for a warrant and install a physical box.

Ofgem’s rules state that energy companies must speak to customers before moving them on to a prepayment meter, but the regulator said it was concerned this was not always happening.

Suppliers may put customers on prepayment meters if they struggle to keep up with bills, arguing it helps them to control how much and how often they pay for energy.

But Rosi Avis, who heads up the Manchester Branch of Citizens Advice, said remote switching is “disconnection by the backdoor”.

“If customers are unaware that they are on a pre-payment meter they might not top up and therefore they are more likely to self-disconnect from their gas or electric,” she explained.

A pre-payment meter

Image source, Getty Images

Citizens Advice told the BBC that so far in 2022 almost 500 people have been in contact in distress after being forcibly moved onto prepayment – a 158% increase in cases on 2021.

It predicts that 450,000 people could be forced onto a prepayment plan this winter and of those, it expects 180,000 to be made as automatic remote switches via a smart meter.

‘I was told by text’

Kelly, who did not want to us to use her last name, was a direct debit customer with EDF when price rises saw her bills more than double from £200 a month to more than £430.

The mother-of-two, who works part-time and receives £320 in Universal Credit per month, quickly found herself about £1,000 in debt.

“I’ve been calling EDF on and off since January to sort it,” she said. “Then I got a letter saying they would change me on to prepayment.”

Kelly tried again to talk to her supplier and told the BBC that communication has been poor and notes on her case were not properly updated.

Then, in October, she simply got a text telling her that she was now on a prepayment plan. “I suddenly only had £3 on my electric until payday. I was so unhappy.”

EDF told the BBC a switch to a prepayment meter was “a last resort” after extensive attempts to discuss support and agree a resolution with the customer.

A spokesperson added: “In this situation, moving a customer to pay-as-you-go will prevent them from continuing to accrue debt at an uncontrollable rate and prompt the customer to take control of their ongoing energy payments.”

‘Steep rise’

More than 152,000 households with smart meters were remotely switched to more expensive prepayment plans for gas or electricity last year, according to data from Ofgem. That is up sharply from 95,000 in 2020.

Ofgem added that some 60,000 households had been switched over the past three months alone.

The huge rise in energy prices means it likely the trend for remote switches will continue.

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Why is this allowed and what can you do?

  • Before smart meters existed, energy firms would have to get a warrant to enter your home and physically install a prepayment meter
  • Now, smart meters enable energy firms to switch customers from direct debit payments to a prepayment meter system remotely
  • Ofgem rules state that energy suppliers must have effective checks and balances in place when switching the mode of a smart meter
  • The regulator advises customers with concerns to speak to their supplier. Under Ofgem rules they must offer payment plans you can afford and you can ask for emergency credit if you use a prepay meter and can’t top up
  • Breathing Space, sometimes called the Debt Respite Scheme, is a free government scheme that could give you up to 60 days’ space from creditors to set up a debt solution. Step Change debt charity can help you to apply.
  • Citizens Advice offers this guide: Stop your energy supplier moving you to prepayment
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Ofgem said customers should be told that smart meters can be switched.

Neil Lawrence, director of retail at Ofgem, said: “Smart meter pre-payment switches are on the increase, and we do monitor that data.

“This should only be when it’s safe and practical to do so, and smart meters should not be switched without those appropriate assessments taking place, including identifying vulnerability,” he added.

Ofgem has written to all suppliers to urgently remind them of their obligations.

“Where they fail to do so, we will take action against them,” he said.

More on cost of living
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The Christians Against Poverty (CAP) charity attended one of Ofgem’s meetings on the matter and said that action is needed urgently.

“We are seeing people switched to a different payment type without conversations happening,” said CAP’s energy relationship manager Paul Walmsley. “That can be really distressing and there should be protections in place for those people.”

“Suppliers should be taking a lot of due diligence with people. They should be making sure there is no vulnerability in the household. They should be making sure the customer has the ability to pay,” he added.

The BBC contacted British Gas, Ovo-SSE, Scottish, EDF, Eon-Next, Shell, Octopus, Bulb, Utilita & So Energy. None were willing to share updated figures on 2022 switches. All stressed that any customers in difficulty should speak to their supplier. Shell also added that a third of their customers switched to prepayment asked to do so, because they see it as the best way to help budget and control spending.

An organisation that promotes smart meters, Smart Energy GB, was keen to point out that the technology has benefits. “If you already prepay for your energy, a smart meter offers several advantages over an analogue prepay meter, such as the ability to top up from home,” a spokesperson said.

“Support is also easier to access – for example, the £400 Energy Bill Support Scheme credit is applied automatically for those on smart prepay with no need to redeem a voucher.”

A spokesperson for the Department for Business, Energy & Industrial Strategy said: “We understand this is a difficult time for families, which is why we have put in place immediate support including the Energy Price Guarantee, which is saving the typical household around £700, in addition to providing the most vulnerable households with £1,200 each this year on top of the £400 support that households are benefitting from.

“We expect suppliers to fully comply with their obligations and welcome the steps Ofgem is taking.”

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Have you had your smart meter switched to a prepayment meter? Share your experiences by emailing haveyoursay@bbc.co.uk.

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