Gas and electricity customers who have fallen so far behind with their payments that they are forced to have a prepayment meter, are to have their court and legal charges capped at £150 by the energy regulator.
Ofgem said that energy suppliers typically bill customers £400 – but sometimes as much as £900 – to cover the costs they incur when they go to court to obtain permission to install a pre-payment meter.
Around 40,000 gas and electricity customers a year are landed with the bills, almost always when their personal finances are on a shoestring.
The current rules allow suppliers to charge warrant and other court costs to the customer, even though this may push the affected household further into debt with the supplier.
Following a consultation, Ofgem said on Friday that the maximum charge relating to the replacement of a pay-monthly meter will be set at £150. As well as the cap, the new measures prohibit suppliers levying any prepayment meter warrant charges, and ban pre-payment installations for people for whom the experience would be severely traumatic, for example, due to mental health issues.
The measures will take effect on 8 January next year.
Rachel Fletcher, Ofgem’s senior partner for consumers and competition, said: “At the moment vulnerable customers face a double blow when they’re hit with high warrant charges on top of existing debt – risking making their situations worse. The measures will protect all consumers, including the most vulnerable, from experiencing unnecessary hardship due to having a meter installed under warrant.
“We want to send a strong message to suppliers that using a warrant to install a pre-payment meter is a last resort. They must step in early to help customers manage debt through repayment plans.”
In April, Ofgem introduced a safeguard tariff to protect customers on prepayment meters overpaying for their energy. Last month Ofgem announced it would extend this safeguard tariff to one million vulnerable customers, from next February. There are plans to extend this safeguard tariff to a further two million vulnerable customers next winter, depending on the timing of the government’s cap on standard default tariffs.
