British Gas customers to receive up to £112m over prepayment meter scandal | Energy industry
Thousands of British Gas customers who were forced to have prepayment meters installed in their homes will receive up to £112 million in compensation and debt will be written off on their energy bills.
In one of the most complex Ofgem investigations in its history, Great Britain’s energy regulator found that British Gas forced prepayments on meters in homes that could not afford their bills at the height of Russia’s gas crisis.
Three years after the scandal emerged, British Gas will have to pay a £20 million penalty to Ofgem’s voluntary compensation fund to compensate unfairly treated customers and write off debts worth up to £70 million.
The supplier will also continue to provide the remainder of the £22.4 million voluntary support package it launched in the wake of the scandal, aimed at supporting customers with prepaid meters (PPMs).
Tim Jarvis, Ofgem’s chief executive, said: “It is clear that British Gas fell short in its treatment of the unacceptable number of vulnerable customers who had PPM installed without their consent, and it is right that they take action to put things right. Customers will receive a significant package of redress, compensation and debt relief for our action.”
Ofgem has temporarily banned the practice of mandating prepayment meters on households who miss recurring payments on their bills, after the Times reported in early 2023 that debt agents working for British Gas ignored signs of vulnerability to install meters.
The regulator later found that most of Great Britain’s major energy suppliers were mandating prepayment meters in customers’ homes as the energy cost crisis in 2022 caused many people to miss bill payments.
The investigation into British Gas has ended nearly a year after a separate investigation revealed that ScottishPower, EDF, E.ON, Octopus Energy, Utility Warehouse, Good Energy, TruEnergy and Ecotricity had fallen short of the regulator’s standards when installing prepayment meters to recover outstanding energy debts.
Suppliers agreed last May to collectively pay more than £18.6 million in compensation to 40,000 households and write off debts on their energy bills.
“The installation of prepayment meters under warranty should be a last resort with stringent controls to ensure the debt is collected lawfully, proportionately and safely,” Jarvis said.
“This investigation forms part of Ofgem’s wider work to raise standards and strengthen consumer protection in the energy market. We continue to push suppliers to do more to identify and support customers in distress and to proactively offer support, and our priority remains to deliver lasting improvements so customers have confidence that they will be treated fairly,” he added.
Chris O’Shea, chief executive of Centrica, which owns British Gas, said: “What happened should never have happened and I am sorry for the prepaid customers affected.
“Over the last three years we have treated this issue with the seriousness it deserves, making changes to our practices and taking measures to ensure we deliver the standards our customers have a right to expect.”
The regulator has allowed suppliers to restart compulsory meter installations less than a year after the moratorium, but compulsory installation remains prohibited in homes with young children or residents over 75.
