Tens of thousands of Brits are set to receive payouts of up to £1,000 each after they were forced to install prepayment energy meters at home.

Energy firms are paying out more than £70million in compensation and financial support after watchdog Ofgem found they were forcibly switching customers to paying upfront after they fell behind on their bills.

In some cases, the regulator found this was being done without the consent of customers – sometimes by switching their smart meters to prepay tariffs remotely – and particularly affected vulnerable customers.

The practice was exemplified at its worst by agents acting on behalf of British Gas, who were observed using court warrants to demand entry into the homes of indebted customers in order to force them onto prepayment meters. 

Some 40,000 people who had prepayment meters forcibly installed are being compensated by eight energy firms, Ofgem said. Other firms remain under investigation, which could lead to further payouts.

The regulator examined 150,000 cases of what it branded ‘involuntary prepayment meter installation’ – covering both meters installed under warrant and smart meters that were remotely switched.

In all, it concluded that fewer than one per cent of forced prepayment meter installation was done when it wasn’t ‘safe or reasonably practicable’.

However, it found that thousands of customers were also poorly supported when they were unable to keep up with their bills, and could have avoided being switched. 

More than £70million of compensation is being paid out to energy customers who were forcibly switched to pre-paid meters

More than £70million of compensation is being paid out to energy customers who were forcibly switched to pre-paid meters

A newspaper investigation found that many vulnerable customers had been switched after falling behind on their bills

A newspaper investigation found that many vulnerable customers had been switched after falling behind on their bills

An Ofcom investigation even found that some customers with smart meters had been forced onto a prepaid tariff remotely

An Ofcom investigation even found that some customers with smart meters had been forced onto a prepaid tariff remotely

The practice was highlighted in an undercover Times investigation in 2023 that exposed agents acting for British Gas using court warrants to force their way into people’s homes to replace their meters.

It sparked outrage and led to the practice being suspended. However, some firms have been given permission to resume force-fitting of meters.

Eight firms are paying out a total of £74million in both compensatory payouts and debt write-offs: 

  • Scottish Power
  • EDF
  • E.ON
  • Octopus
  • Utility Warehouse
  • Good Energy
  • Tru Energy 
  • Ecotricity

Of that, £55m has already been paid out, with £5.6million of compensation and £13million of debt support still to come.

Investigations are continuing into British Gas, Utilita and Ovo Energy, Ofgem said.

Tim Jarvis, the regulator’s director-general for markets, said the review into prepayment meters had been one of the most detailed in its history.

‘While the number of cases where a prepayment meter was wrongfully installed is relatively low compared to the total number of PPM customers, one case is one too many,’ he said.

‘We have made our expectations clear to suppliers on how those customers who were treated poorly should be compensated.’ 

Ed Miliband, the energy secretary, said: ‘Justice is finally being delivered to many of the families, lots of them vulnerable, who were affected by the scandal of energy suppliers wrongly forcibly installing prepayment meters. 

‘Consumers must come first, which is why we are reforming the energy market to stamp out bad practice and make it easier to access proper redress when things go wrong, through our comprehensive review of Ofgem.’

The forced installation of prepayment meters came to light at the peak of the cost of living crisis, when Russia’s invasion of Ukraine forced up energy prices.

An estimated 5.5million people fell behind on their energy bills in mid-2023, according to the Money Advice Trust, which saw many switched to prepaid energy meters.

Some were even switched remotely via their smart meters – a practice that, according to the parliamentary Public Accounts Committee, may have put people off from making the switch from a traditional meter.

After the Times investigation into British Gas exposed the forced installation of prepayment meters, Ofcom halted the practice pending an investigation.

It found suppliers ‘fell short of required standards’ in how customers had been treated.

Now, firms are only permitted to force the installation of prepayment meters unless a resident is over 75, or has children under the age of two, or has a terminal illness.

Companies who break the rules will face enforcement action and unlimited fines. 

Dhara Vyas, chief executive of Energy UK, which represents energy firms, said suppliers had been working with Ofgem to ensure they stuck to the rules – but insisted there were occasions where forced fittings were justified.

She told the BBC: ‘Involuntary installations have been a last – but necessary – resort for cases where repeated attempts to address debt with the customer through other means have been unsuccessful.

‘It’s bad for customers to fall further and further into arrears, and bad debt ultimately drives up the prices that is paid by all customers.’

Are you entitled to compensation? 

Ofgem advises that if you believe you had a prepayment meter forcibly installed, or had your smart meter switched to a prepayment tariff, you should receive compenstation.

To make a claim, you should contact your energy supplier directly, explain the circumstances, and make a formal complaint.

For help with complaints, you can contact bodies such as Citizens Advice and Advice Direct Scotland, who may refer you onto additional agencies such as the Extra Help Unit and the Energy Ombudsman.

The payments are being made in line with recommendations from Ofgem based on what the energy supplier did wrong in each case:

  • Errors in the process, data quality or record keeping: £40-60 goodwill
  • Insufficient debt support: £250
  • Unfair customer treatment: £250
  • Vulnerability not considered: £500
  • Inappropriate installation, switch or use of prepayment meter: £1,000 

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