Millions of people on prepayment meters ran out of credit last year, leaving them without any energy – and experts are calling for immediate action from the government.
How do prepayment metres work?
Prepayment meters are a more expensive method of paying for your energy supply, as it requires topping up the meter through their accounts, or adding credit to a card.
It is usually a payment method for those in rented properties, and can be forced on a customer if they are in debt to a supplier.
Once the credit on the metre is gone, the energy cuts off. If there’s no money to top it up, people end up unable to have access to hot water, heating or cooking.
Prior to smart meters, suppliers had to get a warrant to enter your home and physically install a prepayment meter.
Why are they a particularly problematic way of paying?
According to Citizens Advice, around 3.2 million people in the UK ran out of credit in 2022 alone – this is the equivalent to one person every 10 seconds.
And, for many, it happens regularly, with more than two million people are disconnected at least once a month.
In fact, around 19% of prepayment meter customers spent at least 24 hours without gas or electricity in 2022.
Citizens Advice also claimed it saw more people unable to top up their prepayment meter last year than in the whole last ten years combined, as the cost of living crisis squeezed budgets across the country.
This has particularly affected those with disabilities who need energy to run life-saving equipment.
More than 130,000 households, including a disabled person or someone with a long-term health condition, are being disconnected from their energy supply at least once a week because they can’t afford to top up.
Citizens Advice said it had seen a 229% increase over the last year in customers worrying they could not afford to top up their prepayment meter.
“No heat. No light. No hot water. Nothing,” Citizens Advice summarised. The charity said it has raised concerns to energy regulator Ofgem and the government, noting that it had found evidence suppliers were forcing people in vulnerable groups to install a prepayment meter.
The Big Issue found last year that courts have granted hundreds of thousands of warrants to energy companies, meaning they can forcibly install prepayment meter in customers’ homes.
Suppliers can even switch customers from smart meters to prepayment meters remotely, without their permission.
How do experts want this to change?
Citizens Advice now wants a “total ban on the forced installation of new prepayment meter” – including remotely switching someone’s payment method – until more protective measures are brought in.
Dame Clare Moriarty, chief executive of Citizens Advice said: “The staggering rise in the cost of living means many simply cannot afford to heat and power their homes to safe levels.
“New protections are needed to stop people being fully cut off from gas and electricity. Until then, there must be a total ban on energy companies forcing those already at breaking point onto prepayment meters. If Ofgem doesn’t act, the government must intervene.”
Energy regulator Ofgem already says that certain vulnerable groups should not be forced onto prepayment metres – but they can make the switch if they want to.
End Fuel Poverty Coalition’s Simon Francis also called for “a full ban on the forced transfer”.
National Energy Action is also calling for a ban on the forced installation, and saying those who pay for their energy in cash or by cheque should not have to pay more their energy compared to those with direct debit.
Disability charity Scope is calling for “quicker and stricter sanctions for energy suppliers”, and a “social tariff” which is a discounted energy rate for disabled people”.
How has the government responded?
A government spokesperson said they expected energy suppliers to do everything they could to help with struggling customers, adding: “Suppliers can only install prepayment meters without consent to recover debt as a last resort.”
He pointed out that suppliers are required to offer customers at risk of debt or disconnection an alternative, such as providing emergency credit on prepayment meters.
Labour’s shadow energy secretary Ed Miliband said in response: “It’s outrageous that people on prepayment meter have to pay more for their energy.
“Why should those with the least have to pay more to heat their homes and put the lights on?
“It’s unjustifiable and morally wrong.”
He claimed that a Labour government would “bring down energy once and for all”, by building “a fairer, stronger economy, getting it growing so we can lift living standards for all”.
Under Liz Truss, the government did introduce support for household energy bills back in October.
It came after average energy prices more than doubled in just a year, so even with the support most households were paying significantly more for energy.
But, this support is also expected to end in April.