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Prepayment Meters: Code of Practice

Volume 829: debated on Thursday 20 April 2023


Asked by

To ask His Majesty’s Government how they will ensure that the new Ofgem Code of Practice regarding installing pre-payment meters for vulnerable and disabled customers will be enforced.

My Lords, the code of practice is a step in the right direction, with better protections for vulnerable households, increased scrutiny of supplier practices, and redress measures when prepayment meters were wrongly installed. Ofgem has now confirmed that it will put strengthened rules into energy company licences so that they can be enforced. The Government will monitor very closely the behaviour of suppliers and regulators and will not hesitate to intervene again if necessary.

My Lords, after the appalling behaviour of energy suppliers forcibly installing prepayment meters at the homes of the most vulnerable and disabled, why is Ofgem’s new voluntary scheme not compulsory? Worse, the categories “High Risk—Do not install” and “Medium Risk—Further assessment required” are confused and rely on energy supplier staff to make medical judgments. Someone awaiting a transplant is high risk but, post transplant, when they are medically still very vulnerable, they may not be. As Scope pointed out, does a customer with dementia even have the capacity to respond to chasing calls and emails? Does the Minister think that staff from energy suppliers should be making these medical decisions, and how will safe practice be enforced?

The noble Baroness asked a number of questions. First, Ofgem does not have the right to impose rules without consultation. It is an independent regulator accountable to Parliament, but this voluntary code is agreed by all suppliers; it will be put into their contracts by October. There were some nuances and details perhaps lost in the Ofgem announcement on Tuesday about the code of practice. The medium-risk group is always protected by the precautionary principle so, if there is any doubt that the consumer is financially vulnerable or likely to disconnect, they must not install a prepayment meter. The vulnerable group includes any family with children under five, the elderly over 65, those with many other serious medical conditions including Alzheimer’s and Parkinson’s, and those in temporary situations such as pregnancy and bereavement. Ofgem has worked very hard to try to include everybody in the prevention of installation of prepayment meters and will continue to do so. They have all been paused for the moment.

My Lords, I refer to my interest as honorary president of National Energy Action. Could my noble friend address two vital issues that the code of conduct does not cover? First, prepayment customers pay more per unit than any other customer, regrettably, and that has so far not been addressed by the Government. Will she urgently address it? Secondly, the standing charge is increasing, often every six months, by up to 20% a time. That is a charge over which customers have no control whatever at a time when there is a cost of living crisis.

My noble friend is not quite correct, in that we are doing a lot to tackle the higher costs that PPM users pay, and the Government are taking action to end the prepayment penalty. There are specific costs associated with prepayment meters, not least that the Post Office is often used as a conduit for payment and charges, and there are some regulatory and system costs. We have acted, we are continuing to take action, and we are introducing reforms to the energy bills to remove this premium paid. For the moment, that will be covered by the energy price guarantee and there will be permanent resolution to the issue in April 2024.

My Lords, does the Minister think that the use of the precautionary principle by those who install the prepayment meters is rarely the kind of judgment that these people are expected to make? Are they expected to make a judgment on whether somebody is 85 or 84? Does it not need to be much more clear cut as to who can have the exemption and who cannot?

The noble Lord makes a fair point but, once all the conditions of the code of practice have been met, there must be at least 10 attempts to contact the customer before a prepayment meter is installed. Then when it is installed, which is often with a bailiff, there has to be body camera footage to show that it has been done correctly. The precautionary principle is a very strong bar. If there is any doubt that the consumer is financially vulnerable, cannot pay, and is at risk of being cut off, the meter must not be installed.

My Lords, notwithstanding what the Minister said about the precautionary principle, and following my noble friend, are the Government really satisfied that the firm ban on enforced prepayment meters will not cover high-risk groups such as lone parents of a newborn babies, people with Alzheimer’s, and those aged 80 to 84? Surely they are at high risk and should not have to rely on the exercise of the discretion—the precautionary principle—of the installers.

The noble Baroness mentions some temporary conditions covered by the precautionary principle, which can include pregnancy and bereavement. But if a supplier concludes, taking into account the meter type, the aftercare support, and reasonable energy-saving assumptions, that the household will frequently or for prolonged periods self-disconnect and risk causing significant consumer harm, the supplier must consider the prepayment meter not to be safe or reasonably practical and must not install it.

My Lords, there is understandably grave concern about the effect of prepayment meters on the vulnerable and disabled. Can my noble friend clarify whether the social tariffs are still an option? Additionally, what is being done to improve the energy bill support scheme voucher take-up?

My noble friend refers to a number of policies that the Government have put in place to give financial support to consumers, and social tariffs are indeed still an option. Following the Government’s Autumn Statement commitment, we are working with consumer groups and industry to consider the best approach from April 2024 when the energy price guarantee comes to an end, and this could include social tariffs. As for the energy bill support scheme voucher take-up, we have a problem in that, as of 1 March, 97% of vouchers have been delivered since the scheme launched, but only 78% of these have been redeemed. This means that at this time 2.1 million vouchers have been issued to suppliers but not redeemed by households, so we are carrying out extensive communications, including through the Help for Households, to encourage people to redeem these vouchers. We are making announcements through local radio, charities, consumer groups and the media generally to encourage people to take up this support.

My Lords, we have all heard the harrowing stories that come from forced entry into the homes of the most vulnerable people in this country. I would like some more clarification. Surely discretion from the energy companies is not the answer, as we have heard. Why do the Government not take responsibility and continue the ban on installations until a better system is in place protecting the vulnerable. Is not failure to act on this a dereliction of duty?

The Government were very quick to take action following the Citizens Advice report in mid-January. The Secretary of State responded in late January by writing to Ofgem and all suppliers, and forced installation of PPMs was then stopped within weeks—even before the take-up by the national press campaign—so I do not agree that we have not done enough, quickly enough. The energy, markets and consumer team in the Department for Energy Security and Net Zero is responsible for this. We will monitor Ofgem very closely to make sure that all the provisions that we have put in place to protect vulnerable customers are indeed practicable and enforced.

My Lords, I congratulate the Government on their scheme to help people with energy costs. That was clearly an appropriate response. But in connection with these forced prepayment meter—or smart meter—installations, will the code of practice include how the meters are installed, whether they are installed in places that are accessible, and whether those who have them are trained in how to use them? It should surely be part of the code to ensure that putting in a meter which elderly and disabled people do not know how to operate does not happen. Installing it at the top of a high cupboard which, if people are elderly and cannot reach it safely but need to stand on a stepladder to press that button and restore their energy supply, should not happen either.

The noble Baroness makes some very good points. The aim of the code of practice is to set out very clearly how suppliers should protect customers in vulnerable circumstances. This will include minimum steps that suppliers need to take to conclude whether it is actually safe to install a prepayment meter, with greater prescription—as we have heard—about how vulnerability is defined, and enhanced aftercare for PPM users. Additionally, the supplier will have to carry out a site welfare visit before a PPM is installed. As I have said before, all installations of prepayment meters have been paused until suppliers can prove that they are compliant and have given redress measures to those whose prepayment meters have already been installed.