Households could have to pay an extra £30 a year in a bid to help energy providers avoid debts from changes in prepayment meter (PPM) installations. After reports found that British Gas were “breaking into” people’s homes to fit prepayment meters to collect debts, Ofgem, the energy regulator, implemented stricter rules for its oversight of PPMs.
The fitting and installations of PPMS were temporarily suspended before Ofegm announced a new code of practice.
Customers must be given more chances and more time to clear their debts and forced meter fittings will be banned in homes with residents all aged over 85.
Ofgem announced that energy firms must now try to contact a customer at least 10 times and conduct a ‘site welfare visit’ before they can forcibly install a PPM.
If customers have severe health issues or are over 85 and live alone, installations should also not take place.
Ofgem could introduce the charge on energy bills by October to reimburse companies for rising levels of customer debt that it estimates could total hundreds of millions of pounds, according to The Times.
The levy could be applied to around four million UK households that pay by cash or cheque and who are most likely to fall into debt and already pay a £200 per year premium for their energy as a result.
An Ofgem spokeswoman said: “We recognise that the rules set out in our code of practice could result in fewer PPM installations and that, combined with the current suspension in involuntary PPM installations, this may contribute to higher levels of bad debt of around £30 a year for a household.”
British Gas owner Centirca said: “Protecting vulnerable customers is an absolute priority and we have clear processes and policies to ensure we manage customer debt carefully and safely. The allegations around our third-party contractor Arvato [Financial Solutions] are unacceptable and we immediately suspended their warrant activity.”
Britons who pay by standard credit are allowed to charge customers around £200 a year more than those who pay by direct debit.
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He later told BBC Radio 4’s Today programme: “The contractor that we’ve employed, Arvato, has let us down but I am accountable for this. This happened when people were acting on behalf of British Gas. There is nothing that can be said to excuse it.”
Energy firms can charge standard credit customers about £200 a year to cover debt-related costs compared with only about £30 for direct debit customers.
Ofgem said: “This reflects the fact that standard credit customers are more likely to have unpaid bills and so, on average, create higher debt costs.”
However, campaigners said the move would result in “increased hardship” for vulnerable groups.
Matt Copeland, of national energy action, added: “Adding more costs on to those households who are often the least able to keep up with payments is counter-productive and will result in increased hardship for a group that includes a disproportionate number of elderly people, who are often vulnerable to the impacts of living in a cold home.”
Ofgem chief executive Jonathan Brearley said the regulator needed to balance managing debt, while also protecting vulnerable customers.
However, he said firms’ reputations were on the line if they failed to follow the rules.
On the BBC’s Today programme, he said: “We cannot look at everything that suppliers do, so we cannot guarantee there will be no bad practice out there. But we have the ability to go deep into a company to see what is happening.”
Mr Brearley said there would be “much tighter” monitoring of the new rules.
If companies failed to adhere to the requirements then tighter regulations would be introduced that would be “against their commercial interests”.
To collect debts, energy companies can obtain court warrants which give them legal rights to enter people’s homes and fit prepayment meters if customers have not paid their bills.
Households on prepayment meters are warned they could be missing out on more than £22million worth of energy vouchers as many are due to expire.
The £400 Energy Bill Support Scheme gave all households a payment of £66 and £67 instalments until March 31.
Most households pay bills by direct debit and they received their payments as credit, but those on prepayment meters got support by vouchers.
These were sent by post or email and had to be taken to a Post Office to be credited to their meter.
Express.co.uk has contacted British Gas for comment.
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