Ofgem prepayment meter review leads to compensation and debt write-off

Customers of eight energy suppliers who had prepayment meters wrongly installed between 1 January 2022 and 31 January 2023 are due automatic compensation, and some will have a portion of their debt written off, following a compliance review by Ofgem¹.

The review covered cases where a prepayment meter was installed to recover energy debt, or where supplier processes were not followed adequately¹. Age UK sets out the position as follows:

"Following a compliance review by Ofgem, customers identified as having had a prepayment meter wrongly installed to recover energy debt, or where processes were not followed adequately by their energy supplier, between 1 January 2022 and 31 January 2023 will be due compensation"

Age UK¹

Age UK adds that "Some will have a portion of their debt written off"¹. The eight suppliers are not named in the material, and the amounts of compensation, the timetable for payments and how customers will be contacted have not been reported¹.

Separately, the price treatment of prepayment meters has changed. From 1 July 2023, households with prepayment meters are not charged more for their energy¹. From April 2024, Ofgem is reviewing ways to permanently remove the "premium" on prepayment meter prices¹. There is a price cap on most standard variable prepayment tariffs¹.

Point	Detail
Qualifying period	1 January 2022 to 31 January 2023¹
Who is affected	Customers of eight suppliers, where a prepayment meter was wrongly installed to recover energy debt or processes were not followed adequately¹
Compensation	Due automatically to identified customers¹
Debt	Some will have a portion written off¹
Prepayment price premium	Removed from 1 July 2023¹
Ofgem review of the premium	Under way from April 2024¹

Age UK also notes that suppliers "shouldn't install prepayment meters in the most vulnerable households"¹, and that customers should not have to pay to have a prepayment meter installed¹.

Why it matters for households

The compensation applies to a closed window: meters installed between 1 January 2022 and 31 January 2023¹. Households whose meter was fitted outside that period, or whose case was not identified in the review, are not covered by the compensation described¹. For those inside it, the money is automatic rather than applied for, and for some the effect extends beyond a one-off payment to the size of the debt they owe their supplier¹.

The pricing change is broader. Since 1 July 2023, prepayment customers have not paid more for their energy than other payment methods¹, which affects ongoing bills rather than a past period. Ofgem's work from April 2024 on removing the prepayment "premium" permanently is a review, not a decided outcome, and no conclusion has been reported¹.

What happens next

Ofgem's review of ways to permanently remove the prepayment price premium began in April 2024 and is ongoing¹. No date has been reported for the compensation payments, and no deadline for affected customers to be contacted has been reported¹.

Sources1 cited