Thousands of energy customers who has prepayment meters installed without their permission will be entitled to up to £1000 compensation.
Regulator Ofgem today said suppliers who breached the rules when installing meters will have to pay a total of £18.6 million in compensation and debt write off to at least 40,000 customers.
The scandal first erupted more than two years ago at the height of the cost of living crisis.
It first emerged that agents working on behalf of British Gas were using court warrants to demand entry into the homes of indebted customers to force them onto prepayment meters.
An investigation by The Times uncovered how vulnerable people’s homes were broken into by agents.
One debt agent is reported to have said: "This is the exciting bit. I love this bit."
Ofgem, which ordered suppliers to halt the practice in 2023, today said they must pay £5.6 million in compensation and write off a further £13 million debt who had a pre payment meter installed during January 2023.
Compensation ranges from £40 to £60 for “process misalignment, data quality and record keeping” to a maximum of £1000 for “inappropriate installation.”
Customers due compensation will be contacted by their supplier. Compensation will be paid directly to customer accounts.
Today’s package is on top of £55 million of financial support provided to affected consumers by energy suppliers in the form of hardship payments and debt write-off.
Tim Jarvis, Ofgem’s Director General, Markets, said: “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.
“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 added: “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.”
Energy Secretary Ed Miliband 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 pre-payment meters.
“The government has campaigned tirelessly on this issue and are pleased to see the level of compensation increase to £18.6 million, up from £420,000 under the previous government.
“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.
“This increased compensation package is a good start, and we will be announcing further reforms in the weeks ahead as we deliver our Plan for Change.”
Dame Clare Moriarty, Chief Executive of Citizens Advice, said:
“The prepayment meter scandal must never be allowed to be repeated. As energy bills soared, suppliers broke into homes with no warning to force installation of prepayment meters, while those with smart meters were remotely switched to prepayment mode. It resulted in tens of thousands of people unable to afford to keep their meters topped up, often with devastating consequences.
“We know the rules weren’t always followed by some energy suppliers, and that loopholes were exploited. While it’s right that those rules have been tightened, it’s also vital that consumers get compensation for the distress that was caused.
“The framework announced by Ofgem will help rebuild much-needed trust in energy suppliers. But three years on from this scandal, suppliers must work quickly to make sure those who were worst affected receive the compensation they deserve.”
