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Ofgem consultation: Prepayment meters installed under warrant: final proposals

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Response to the Ofgem consultation: Prepayment meters installed under warrant: final proposals

We support Ofgem’s proposals on improving how prepayment meters installed under warrant work for customers in financial difficulty.

Our response to this consultation will set out some analysis of our clients’ experience of fuel debt.

StepChange clients with fuel debt

The number and proportion of people StepChange Debt Charity has seen with gas and electricity debts has grown in recent years.

  • In 2011 we saw 12,657 people with electricity arrears, around 8% of our clients who were responsible for an electricity bill. By 2015 this had increased to 32,183, or around 14% of our clients with an electricity bill.
  • In 2011 we saw 9,461 people with gas arrears, around 8% of all clients with responsibility for a gas bill. By 2015 this had risen to 21,236 people, around 12% of all clients with responsibility for a gas bill.

The rate of increase has steadied off over 2015 and the start of 2016, but the numbers of people we are seeing with fuel debts are still considerably higher than five years ago.

Further analysis of StepChange Debt Charity clients with fuel debts (gas and electricity) shows how people with fuel debts are more likely to show signs of broader vulnerability than our clients who do not have fuel debts.

Summary

StepChange Debt Charity agrees with Ofgem’s proposal for installations of PPMs under warrant should be avoided wherever possible, and only used as a last resort. Based on a survey of 1,794 StepChange clients in May 2016, one in three clients with utility arrears said they had a prepayment meter forced upon them. 27% of these prepayment meters are from electricity providers and 24% are from gas providers.

We advocate an affordable repayment approach for energy providers, to reduce the financial pressure that debtors face, and prevent debt problems being made worse.

We support the proposal of a cap on the cost of all charges related to the application, execution, and installation of a PPM under warrant. The additional burden of paying for the installation of a prepayment meter could be unmanageable for customers in financial difficulty and would only serve to push them further into problem debt.

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Foundation for Credit Counselling Wade House, Merrion Centre, Leeds, LS2 8NG trading as StepChange Debt Charity and StepChange Debt Charity Scotland. A registered charity no.1016630 and SC046263. It is a limited company registered in England and Wales (company no:2757055). Authorised and regulated by the Financial Conduct Authority.

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© StepChange Debt Charity 2016