Personal Finance

UK energy suppliers stop clawing back debts via prepayment meters

Leading energy suppliers have stopped reclaiming debts from some prepayment meter customers amid calls for an industry moratorium on clawing back money owed through the devices.

The Guardian understands that ScottishPower, which has nearly five million customers, has stopped recovering outstanding debts from people who have been moved on to prepayment meters in recent weeks.

Energy suppliers often put customers on to prepayment meters as part of a plan to prevent them from amassing large debts. Customers then pay for their usage and standing charges as well as funds towards paying off their debts.

However, some suppliers have temporarily stopped chasing these debts amid concerns over the impact of the cost of living crisis.

MPs joined charities and consumer groups in calling for an immediate ban on the use of court warrants after Guardian reported estimates from Citizens Advice that 600,000 people were forced to switch from credit meters once they had run up debt with their energy supplier in 2022, compared with 380,000 in 2021.

Graphic: rise in people who cannot afford to top up their prepayment meter

The charity raised concerns over the treatment of vulnerable people after it found that millions of Britons were regularly going without heat or power last year amid fears over sky-high bills.

The energy suppliers Ovo and E.ON promised last month to stop all debt recovery on prepayment meters until at least March. Ovo, Utilita and Shell paused forced installations by warrant over Christmas. ScottishPower has stopped the practice since December.

Campaigners have now called on more energy suppliers to follow suit. A report on the use of prepayment meters by the thinktank Humane Energy, seen by the Guardian, demands an immediate ban on “clawbacks” of energy debt until the end of March and during subsequent winters. It suggests a limit of £1 a week should be recoverable during the intervening periods.

The campaigning thinktank also calls for all customers on prepayment meters to be classed as vulnerable until they have been assessed otherwise through communications with their energy supplier and that process is overseen by regulator Ofgem.

The role of magistrates has been questioned after it emerged that a handful of courts around the country are signing off thousands of entry warrants each month, allowing suppliers access to force people on to prepayment meters.

Graphic: number of warrants of entry

The Humane Energy report raises concerns about the increasing number of people being remotely switched on to prepay tariffs through a smart meter.

Barry James, the thinktank’s founder, said: “Customers agreeing to take a smart meter are typically unaware they can be remote-controlled to cut off supply or to ‘mode-switch’ to prepay at a moment’s notice. Worse, they can, and are being, foisted on distressed customers, including vulnerable households, to pick their pockets, with up to 50% of each payment swiped as clawback for arrears.

“Regulation has yet to catch up, but even current protections are being evaded, depriving vulnerable customers of intended protections. The government needs to work urgently with regulator Ofgem to ban clawbacks during winters, and limit them at other times of year.”

Last week, Labour MPs called for a halt to the forced installation of prepayment meters and additional financial support from government as they cost customers more than credit meters paid by direct debit.


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