The Analysis Editor’s Letter


How should we view the future of prepayment meters?


Stephen Kiely Editor, CCRMagazine stephen@ccrmagazine.co.uk


Prepayment meters have long been a point of some discussion and controversy in the energy sector. On the one hand, they provide an essential way for creditors to curb losses, but also give some degree of control to customers. Whereas, on the other, they are costly to install and often criticised by consumer groups. This debate rolled on, last month, as


regulator Ofgem announced a £150 cap on charges for installing prepayment meters under warrant for customers in debt, and banned charges for the most vulnerable. At the same time, industry body Energy


UK set out principles which aim to provide improved safeguards for smart meter prepayment customers switching supplier. Energy suppliers of all sizes have signed up


to the principles and agreed to implement them as they roll out smart prepayment. These principles include:


l Communicating clearly to customers, using appropriate channels,


that any


remaining credit on the meter will reset to zero on the day of switching, and clearly communicating what will happen to any account credit balance, as well as other key messages regarding the switching process. l Ensuring that the customer has the information, or vending device, or top-up ID to facilitate supply on the start date. l Supporting customers through appropriate actions which ensure they maintain supply throughout their switch, and taking appropriate steps to safeguard them from financial detriment resulting from the switch. This may include taking additional steps for vulnerable customers. Energy UK insisted that prepayment was a useful tool for


managing energy costs and, when switching supplier, it was important to ensure such customers understood the process and were in control of it. Chief executive, Lawrence Slade, said: “The launch of the smart


prepayment switching principles demonstrates the industry’s ongoing commitment to ensuring the switching process works well for customers and providing support for those who need it.


December 2017


important to ensure such customers understood the process and were in control of it


it was


Energy UK insisted that prepayment was a useful tool for managing energy costs and, when switching supplier,


“Smart meters bring great benefits to


consumers and, as the rollout continues, more and more prepayment customers will be able to switch with confidence as a result of these principles.” Suppliers can apply to the court and


install a prepayment meter under warrant, as a last resort when customers fall into arrears. As well as the £150 cap, Ofgem’s new rules will prohibit suppliers levying any prepayment meter warrant charges, and ban installations entirely for the most vulnerable customers. In addition, Ofgem will introduce a


proportionality principle covering costs and actions of suppliers, for all customers in the debt-recovery process. These measures will take effect from January next year. Rachel Fletcher, Ofgem’s senior partner


for consumers and competition, said: “Protecting vulnerable customers is a priority for Ofgem. At the moment, vulnerable customers face a double blow when they are hit with high warrant charges on top of existing debt – risking making their situations worse. “The measures will protect all consumers, including the most vulnerable,


from


experiencing unnecessary hardship due to having a meter installed under warrant. “We want to send a strong message to


suppliers that using a warrant to install a prepayment meter is a last resort. They must step in early to help customers manage debt through repayment plans.” In April, Ofgem introduced a ‘safeguard tariff’, aiming to protect


customers on prepayment meters from overpaying for their energy. In October, it announced that it would extend this tariff to 1 million vulnerable customers in February 2018. There are plans to extend it again to a further 2 million vulnerable customers next winter, depending on the timing of the government’s cap on standard default tariffs. Clearly it is a debate that shows few signs of coming to a close any


time soon. Enjoy the magazine!


www.CCRMagazine.co.uk 3


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