Exclusive: Energy firms are forcing thousands of customers onto prepayment meters as bills soar

Thousands of people in debt to their energy companies are having prepayment meters forcibly installed in their homes during the worst cost of living crisis in a generation, The Big Issue can reveal. 

Data obtained by The Big Issue shows that courts in England and Wales have granted more than 187,000 warrants to energy companies this year to allow them to enter customers’ homes and forcibly install prepayment meters. 

Suppliers are able to obtain warrants to install prepayment meters when their customers fall into debt as a way for them to recoup the money they’re owed. 

They are generally more expensive than fixed energy tariffs and have been criticised by numerous charities for trapping low-income households in poverty.

They require households to pay for energy before using it, usually with a smartcard or token that can be topped up at a shop or via a smartphone app.

Energy companies have an obligation to support customers when they have difficulty paying bills, but experts The Big Issue has spoken to have suggested many are failing to live up to these commitments. 

Simon Francis, co-ordinator of the End Fuel Poverty Coalition, called for an “immediate cessation” of applications for warrants to focus instead on “how we help those consumers who have built up debt due to the rising energy prices”.

The data comes as British Gas owner Centrica reports profits of £1.34 billion for the first six months of the year, a five-fold increase on 2021.

At the same time, new projections have suggested that the average annual energy bill may hit £3,850 in January when the price cap is raised by Ofgem.

Financial campaigner Martin Lewis has warned that the rise will leave households forced to make “awful choices”, while MPs warned this week that millions will be facing “unmanageable debt” as a result of the increase.

In 2018, energy regulator Ofgem warned that seeking warrants to install prepayment meters should be a “last resort” for energy companies after data showed the number of forcible installations had risen. 

Ofgem banned forcible installations for “the most vulnerable” in that same year, but experts The Big Issue spoke with suggested that vulnerable people are still being affected. 

An Ofgem spokesperson told The Big Issue that installing a prepayment meter should only be a “last resort” for suppliers. They added: “[Energy companies] must step in early to help customers manage debt through repayment plans. As part of our role, we have taken steps to ban installations entirely, for the most vulnerable customers.

“This includes, for example, prohibiting charges for people in severe financial difficulty, and banning installations entirely for people for whom the experience would be severely traumatic, such as those with severe mental health issues.”

Sarah Pollard, a specialist debt adviser at the Vauxhall Community Law Centre said the forcible installation of prepayment meters is having an “appalling effect” on the people she works with. 

“The people we support are very, very vulnerable. I’ve had cases where someone was on their energy company’s vulnerable list but still had a prepayment meter installed,” she said.

“If you put somebody on a low income on a prepayment meter, they have no backup whatsoever. They just run out of energy.”

Citizens Advice said this week that the service is seeing “a truly unprecedented number of people who can’t afford to top up their prepayment energy meter” as the cost of living crisis bites.

Data obtained by The Big Issue via Freedom of Information laws shows that between January and June of this year, more than 187,000 warrants were granted to energy companies to install prepayment meters in homes and businesses in arrears.

Between April and May, when the first bills came through following the energy price cap rise of more than 50 per cent, approved applications for warrants shot up by 23 per cent, from 27,389 in April to 33,774 in May. 

May also saw a higher number of applications granted than in the previous year, where 27,174 were approved by courts in England and Wales. That’s a 24 per cent increase. 

As well as paying more for energy on a prepayment meter, those who have them forcibly installed can also find themselves liable for the costs of installation, capped by Ofgem at £150. This cost is usually added to the amount they already owe. 

Though most applications for warrants are uncontested, those who do want to challenge them must go to court to do so, and will often find themselves liable for the costs associated with this.

A number of energy companies have made public commitments to protecting their most vulnerable customers, with 15 suppliers including British Gas, Scottish Power and EDF Energy signing up to Energy UK’s “vulnerability commitment” in 2020. 

All three of these companies have applied for warrants to forcibly install prepayment meters in 2022, however. 

In May, The Big Issue also reported that at least two energy companies had lobbied the government to try and relax their obligations towards helping vulnerable customers.

Energy companies are supposed to work with their customers to arrange fair plans for repaying outstanding debts, but Pollard of the Vauxhall Community Law Centre said many are “too quick” to resort to prepayment meters. 

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“I would like Ofgem to understand that the big providers will not work with us to support their customers to arrange arrears repayment plans, they are too quick to move to prepayment,” she said. 

Francis added: “Just at the very time when energy firms should be looking to help families struggling with rising bills, we see them trying to force people onto more expensive prepayment meters.

“With millions of vulnerable households already in fuel poverty and facing a winter of dire hardship, we need an immediate cessation of these applications and a focus on how we help those consumers who have built up debt due to the rising energy prices.

“As well as emergency financial support from the government and help to improve energy efficiency of homes, we would urge energy firms and policy makers to consider introducing energy debt relief and wider support similar to that provided during the lockdown,” he said. 

If you are struggling with debt on your energy bills, please seek regulated debt advice as soon as possible. You can contact The National Debt Line, Step Change or Money Helper for free advice. Fuel Poverty Action also has a guide on your rights when it comes to paying energy bills.