Back in February The Times published an exposé into the forced installation of pre-payment meters (“PPMs”) by British Gas among others. The article created a huge scandal, putting British Gas in particular in the cross-hairs of politicians, the media and Ofgem. However, I had some issues with the report and the reaction to it.

First of all, it is not illegal or even wrong for bailiffs to break into homes, even the homes of vulnerable consumers, in order to install pre-payment meters. There are rules around when and how such moves can be made and the Times article did not provide enough background to know if these rules had been followed. For example, installing a pre-payment meter in the home of a vulnerable consumer should be a last resort not a first resort, but there was no evidence either way as to what if any efforts had been made by British Gas prior to seeking a warrant for a forced PPM installation. Ultimately energy is not free, and if any customer, even someone who is vulnerable, consistently fails to pay and fails to engage with their supplier, then they can be forced to pay in advance – no-one suggests security guards in Tesco are wrong for preventing shop-lifting even if the thief is vulnerable. British Gas is now the subject of an Ofgem investigation to determine whether correct procedures were followed.

Secondly, the article exposed real issues with the way in which warrants are signed off. These are apparently done in bulk, based on a sworn statement by the supplier’s agent. In our legal system, we tend not to simply rely on a person’s sworn evidence – if we did, prisons would only contain those who pleaded guilty! Our legal system does not simply take people’s word for it – evidence is tested. Warrants should not be signed off in bulk – forced entry into someone’s home is not something to be taken lightly and the courts should provide the final check and balance, to ensure procedures have been correctly followed and no errors have been made (or shortcuts attempted).

Thirdly, the really egregious behaviour described in the article was that of Arvato, the debt collection company used by British Gas and other suppliers. Its agents were shown taking delight in upsetting people and were indifferent to the circumstances of the people whose homes they were invading. They also showed little respect for their property. But as they are not, unlike British Gas, a household name, the focus of public anger has been on the energy company and not the debt collection business whose behaviour was materially worse. It is the responsibility of suppliers to make sure agents acting on their behalf follow the rules, and there are questions that can usefully be asked as to how this can be achieved, particularly when the issue is largely around attitude and culture.

Since then, the forced installation of pre-payment meters has been suspended, leading to an admission from Ofgem Chief Executive Jonathan Brearley that the bills of customers that do pay their bills may have to rise to cover the losses to suppliers from those that do not. This is unavoidable but also undesirable – energy companies should not be carrying out wealth re-distribution – that is something for the Government, and is why a social tariff with embedded measures around payment delinquency should be introduced.

“If this debt cannot be recovered from some customers, then this increases costs for suppliers. We are aware of the difficult balance here as unrecoverable debts from some customers may then be recovered from the bills of paying customers, many of whom are themselves struggling with paying their bills given the wider affordability issue. We have an ongoing programme of work to assess costs to suppliers from customer debt,”
– Jonathan Brearley, Chief Executive, Ofgem

Meanwhile other suppliers warned that by not installing pre-payment meters, the debts of customers that are not paying their bills will simply keep rising and could become completely unaffordable, which is in itself an ethical problem.

“It’s easy to make bold statements but unless you’re prepared to have a grown up conversation about money then the debate goes nowhere. If these customers aren’t going to pay, who will? Because energy suppliers are already losing money and are people actually going to vote for an increase in their own tariffs to cover the cost of non installation of prepay or an increase in taxes? Or are we just going to let this spiral until it gets to debt collection? My point is, this issue is much wider than nasty, old energy companies. There needs to be a solution. But at the moment all we get is name-calling,”
– Bill Bullen, Chief Executive, Utilita

Since then, Ofgem has announced a number of measures:

  • The terms of reference of the urgent investigation into British Gas
  • The scope of the in-depth Market Compliance Review into the issue of how PPMs are handled across the market, to include targeted engagement facilitated through consumer groups and the Energy Ombudsman
  • A call for all suppliers to use the current pause in PPM installations to proactively check if any have been installed incorrectly and, if so, to consider removing them and offering compensation where appropriate. Ofgem will be checking actions but has made clear that suppliers should not wait to act themselves.
  • The launch of urgent work with stakeholders to look at what further protections may be needed within the rules, regulations and guidance around PPMs and seek views on other measures that could reduce the need for PPMs to be installed or switched to remotely, to conclude by the end of March 2023

Interestingly, in its announcement, Ofgem explicitly linked its work on PPMs with wider concerns over affordability and referenced its recent calls for the Government to consider “examining, with urgency, a social tariff that limits the impact of extremely high prices and reduces volatility for a defined set of vulnerable groups”.

Subsequently, the Government has announced that over 94,000 prepayment meters were forcibly installed in homes under warrant last year without customer consent. British Gas, Scottish Power and OVO Energy, were responsible for 70% of all forced installations with a total of 66,187 devices fitted under warrant. Scottish Power was described as the “worst offender when taking into account their customer base” – force fitting over 24,300 PPMs in 2022, although British Gas actually installed more at 25,000.

forced pre-payment meter installations 2022

Last week the story took a dramatic turn when Ofgem decided to try to coerce The Times into handing over all the material it gathered in putting together its article, threatening it with criminal prosecution and unlimited fines if it failed to comply. Ofgem apparently demanded to see the undercover recordings and the journalist’s “personal notes”, and suggested it was a criminal offence not to comply “without reasonable excuse”. The newspaper declined to comply, saying that the information requests “were unlawful attempts to force the compulsory disclosure of journalistic material”.

There was a rapid backlash on social media, with commentators pointing out that Ofgem does not regulate the press and was likely stepping outside its powers with its demands. Energy Secretary Grant Shapps criticised Ofgem saying that it needs to fix the issues uncovered by The Times, and not threaten the journalists who uncovered them. The whole situation being reminiscent of the old adage about the foolishness of picking a fight with people who buy ink by the barrel.

“Ofgem, who are [sic] a regulator, need to fix the problems that were uncovered, not be pursuing, or threatening to pursue journalists who’ve uncovered these things, I would say, that the regulator should have been finding itself. I can be as clear as you like on this. It is wrong for them to be pursuing the journalists. I would be very disappointed to see them progress that through the courts. The journalists are merely doing the job of uncovering something which absolutely should not be going on. I have cracked down very hard on that particular scandal, which was to do with prepayment meters. I expect the regulator to do the same job,”
– Grant Shapps MP, Secretary of State of Energy Security and Net Zero

Ofgem rapidly backtracked, saying it had withdrawn its demands and hoped to engage with the paper on a voluntary basis. Jonathan Brearley wrote to Tony Gallagher, the editor of The Times, saying that his officials “fully respect the laws and principles that protect journalistic integrity, and our intention was never to impinge upon or compromise that freedom”.

The whole episode was quite extraordinary. Citizens Advice has long criticised Ofgem for failing to enforce market rules to the detriment of consumers – arguably, Ofgem and not a newspaper, should have been the one to reveal the problems with forced installations of pre-payment meters. It also could have obtained much of the information it was seeking from The Times from other sources. Clearly, the regulator is feeling the pressure, after facing strong criticism in the past year over its regulation of the retail market, but this was clearly a stupid move.

It’s right that Ofgem should investigate the issues uncovered by The Times, but it needs to do so in a rigorous and professional way, and without pre-judging the outcome. I remain to be convinced that Ofgem is capable of appropriate regulation of the retail energy market, something which is set to become harder as Ofgem’s powers are broadened to include heat networks. I’m not calling for Ofgem to be disbanded – in practice that would be little more than a re-branding exercise since any new regulator would almost certainly be staffed with former Ofgem employees. No, I would prefer for regulation of the retail energy market to be moved to the Financial Conduct Authority, reflecting the fact that energy retail is a virtual businesses which is more concerned with holding customer money than with physical gas and electricity.

Either way, the retail energy market is in dire need of reform, and it seems unlikely that the current regulator has the skills or bandwidth to do anything more than fight fires. Both suppliers and their customers deserve better.

Subscribe to the Watt-Logic blog

Enter your email address to subscribe to the Watt-Logic blog and receive email notifications of new posts.