Energy regulator Ofgem is to introduce new rules to cap installation costs for customers who are forced to have prepayment meters fitted, and will ban charges altogether for the most vulnerable customers.
The rules, which come into effect in January, will mean suppliers can charge an overall maximum of £150 when a warrant, obtained in court, is used to force-fit a prepayment meter to recover debt.
Current rules let suppliers charge customers for the cost of gaining a warrant, including court costs. On average, a dual-fuel customer who has a prepay meter installed under warrant is charged £400 – but this can be as high as £900 – potentially pushing them further into debt.
The regulator is also to ban charges completely for those in severe financial difficulty (who will be identified by suppliers through indicators such as debt relief orders or credit checks) and will ban force-fitting prepayment meters under warrant entirely for people who would find the experience "severely traumatic" due to mental health issues, for example.
If you're struggling with debt, see our Debt Problems guide for what to do and where to get help.
Why would I be forced to get a prepayment meter?
If you've a credit meter and you fall into debt, your supplier will try to collect payment. If it can't take payment or arrange a plan to recover the debt, it can apply to a magistrate to get a warrant to install a prepayment meter to recover the debt, by taking part of your payment every time you top up.
It will then visit the property with meter installers, locksmiths or any other help it needs.
In 2016, about 40,000 gas prepayment meters and 41,000 electricity prepayment meters were installed under warrant. This compares with a total of 3.5 million gas and 4.5 million electricity customers with prepayment meters.
'Protecting vulnerable customers is a priority'
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're 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."