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Major energy suppliers hand out £1,000s in compensation over energy meter scandal

MAJOR energy suppliers will hand out £1,000,’s in compensation following an energy meter scandal.

Impacted customers are set to receive thousands of pounds and could see debts written off as part of a review by Ofgem.

This comes after a scandal which emerged at the height of the cost of living crisis, when Russia’s invasion of Ukraine led to a spike in energy prices.

It was discovered energy firms were switching people who struggled to pay their electricity bills onto prepayment methods.

A previous Times investigation revealed British Gas sent Arvato debt collection agents to “break into” people’s homes and “force-fit” prepayment meters (PPMs).

Suppliers can fit these meters as a last resort to collect debt from customers who are behind on their bills.

But a new code of practice governing the installation of prepayment meters, which all energy companies signed up was put in place after the investigation.

Firms were also barred from forcibly fitting PPMs until Ofgem signs off that they are compliant with the legal changes.

Since then, some energy firms have been allowed to begin force-fitting meters again after agreeing to comply with new rules.

For all installations, suppliers must now make at least 10 attempts to contact a customer and carry out a welfare visit before a PPM is installed.  

Now firms including Scottish Power and Octopus have been told to pay out more than £70 million in compensation and support to impacted customers.

Those impacted are reported to receive payments starting at £40, with the figure rising to £250 or £500, depending on the way they were treated by their supplier.

£1,000 payments will be for customers who faced “inappropriate installation”.

Ofgem announced a Market Compliance Review (MCR) into involuntary prepayment meter practices at the start of 2024.

A total of eight suppliers will now pay out a further £18.6million in compensation.

These include:

• Scottish Power
• EDF
• E.ON
• Octopus
• Utility Warehouse
• Good Energy
• Tru Energy
• Ecotricity

This is on top of £55million that has been allocated in support.

Meanwhile, a further £5.6million would be paid in compensation to 40,000 customers impacted by the scandal and £13million will go towards writing off debts.

Investigations are continuing to take place for British Gas, Utilita, and Ovo.

Last year, energy suppliers paid out compensation totalling £342,450 to customers.

Tim Jarvis, director-general of markets for Ofgem, said: “Our priority has been to put things right for those who werent treated properly, and ensure we dont see bad practice repeated.

“We know that prepayment meters can be an effective tool in helping customers manage their costs and debt.

“However, customers must always be treated fairly and compassionately, and we are confident that the changes we have made are a significant step to ensure that happens.”

Dame Clare Moriarty, Chief Executive of Citizens Advice, said what happened “must never be repeated”.

“We know the rules werent always followed by some energy suppliers, and that loopholes were exploited.

She added: “While its right that those rules have been tightened, its also vital that consumers get compensation for the distress that was caused.

Meanwhile, Energy Secretary Ed Miliband said that justice was “finally being delivered.”

He said: “Consumers must come first, which is why we are reforming the energy market to stamp out bad practice and make it easier to access proper redress when things go wrong, through our comprehensive review of Ofgem.”

How you can claim compensation

Ofgem says if a customer thinks their supplier installed a prepayment meter or switched their smart meter to prepayment meter mode when they should not have, they may be entitled to compensation.

They should contact their energy firm, explain their circumstances, and make a complaint.

If you’re looking to make a complaint there are organisations who can help.

Consumers can contact Citizens Advice and Advice Direct Scotland.

If customers need extra support, the complaint may be referred to Extra Help Unit and Energy Ombudsman.

Ofgem also said it is working with each agency to ensure that they are taking a joined-up approach to ease stress for consumers.