Consumer Scotland recommends continuing the pause on prepayment meter installations

Consumer Scotland, the statutory body for consumers in Scotland, has recommended that the current pause on prepayment meter (PPM) installations continue until Ofgem is confident that individual suppliers comply with licence conditions¹. The recommendation was published in its briefing on prepayment meters and the energy crisis in winter 2022, first published on 14 March 2023¹.

The briefing states that the pause, alongside Ofgem's prepayment Market Compliance Review, are important actions towards protection for prepayment meter consumers, but that the risk of disconnection and associated harms still exists for the 421,000 households in Scotland using prepayment meters¹. It also recommends that processes ensuring PPM installations are a last resort be strengthened, with what it calls fit for purpose affordability processes and an onus on suppliers to prove no vulnerability exists in a household; that Ofgem expand the vulnerability criteria to include financial vulnerability, with greater consideration given to protecting disabled consumers; and that there be parity of costs for direct debit and prepay customers¹.

Scotland has a high number of households on prepayment meters, at 17.9% of households, according to the briefing¹. It reports that 42% of households in the social sector have prepayment meters, compared with 21.3% of private sector and 5.4% of owner occupied households, and that 25.8% of single adult households and 48.5% of single-parent households have one¹.

Why it matters for households

The recommendation concerns households that pay for energy in advance through a prepayment meter, and those that suppliers might seek to move onto one. The pause on installations is the point at issue: Consumer Scotland's position is that it should continue until Ofgem is confident individual suppliers comply with licence conditions¹. For the 421,000 households in Scotland already using prepayment meters, the briefing says the risk of disconnection and associated harms still exists¹. Disconnection, often called self-disconnection in the industry, can leave people unable to meet essential needs such as storing and cooking food, keeping warm, bathing, washing, using medical appliances or storing medication¹.

The briefing also sets out differences in how prepayment consumers report their finances compared with other payment methods.

What happens next

The briefing makes its recommendations to Ofgem and suppliers¹. It states that the pause on PPM installations should continue until Ofgem is confident individual suppliers comply with licence conditions, that affordability processes should be strengthened with an onus on suppliers to prove no vulnerability exists in a household, that Ofgem should expand the vulnerability criteria to include financial vulnerability, and that there should be parity of costs for direct debit and prepay customers¹. No date has been reported for a decision on the pause. The briefing also notes a role for the courts in strengthening the approval system for warrants for legacy prepayment meters¹.