Ofgem calls for prepay meter installation fees to be capped
Published 22 September 2016
Vulnerable customers will no longer have to foot the full bill for installing a prepayment meter.
If you fall behind with your energy bills and you can’t set up a repayment plan with your supplier, they might install a prepayment meter in your home.
At the moment, the homeowner can have to foot the full bill for this work – an amount that energy regulator Ofgem says can be as much as £900 at a time, and on average around £400. The costs can include court fees, as well as any related charges such as locksmiths or even dog handlers.
But under new potential rules, this could all change. We're going to take you through the proposed changes and what they could mean for you if you get a prepayment meter.
What is being proposed?
In 2015, some 86,000 prepayment meters were forcibly installed in UK homes – around 38 per cent of the costs acquired by suppliers were charged back to customers already in debt.
Ofgem has been investigating this over the past year and it now suggests that prepayment meter customers should face a maximum installation fee of £150. And for any customers in a particularly vulnerable position, there should be no charge at all.
The regulator is proposing the changes to take the burden of these costs away from customers already struggling to pay their bills. Typically, energy costs more for customers with prepayment meters than those with traditional credit meters.
This isn't the only proposed plan affecting prepayment meter customers. The Competition and Markets Authority (CMA) has ordered a price cap on energy charges for prepayment customers on a temporary basis between 2017 and 2020. This cap will come into force from next April and we don’t yet know what it will be set at, but it is thought it could save prepayment meter customers around £75 a year.
What does this mean for me?
These proposals should help to stop vulnerable customers being pushed further into debt, when they're already struggling to manage their repayment costs. In particular, a cap on energy charges for prepayment customers should stop them paying over the odds for this service.
If you find yourself falling behind with your energy payments, it's important not to panic. Your supplier can’t just cut you off without giving you lots of prior warning beforehand. So speak to your provider and see what help they can do to make your payments more affordable.
Look at your budget (or make one if you haven't already) and see what you're spending each month in comparison to what you're earning. Once you have a picture of this, see if there are any areas where you can make cutbacks. Energy is a necessity so try to cut down on everyday treats like buying your lunch at work or going out every weekend to help free up your budget.
A prepayment meter should only ever be seen as a last resort rather than an easy fix – although you won't have a choice in the matter if your energy supplier decides it's appropriate for you.
Moved into a property with a prepayment meter already installed? Find out if you can remove a prepayment meter here.