Ofgem calls for a level playing field for prepayment customers

Press release

Publication date

Industry sector

Supply and Retail Market
  • Ofgem review reveals a variation in suppliers’ treatment of prepayment meter (PPM) customers
  • Ofgem seeks early agreement by suppliers  to abolish costs for installing and removing PPMs to make switching easier
  • Ofgem is working with suppliers to tackle lack of tariff choice and to ensure PPM customers are treated fairly

Ofgem is today calling on all energy suppliers to treat PPM customers fairly as its review shows disparity in the treatment they’re receiving. 

Ofgem identified that around 60% of suppliers do not charge for PPM installations and 95% of meter removals were carried out for free. However, suppliers who do so, charge up to £180 and £160 for installing and removing PPMs respectively. The regulator also found that over 40% of suppliers don’t charge security deposits when customers wish to pay by standard credit or direct debit. For those who do charge, the average cost for consumers is £211.

Ofgem will now work with suppliers to abolish installation and removal charges ahead of an autumn consultation. These costs can put many people off from switching. Removing these barriers could help consumers save up to £300 per year if they switch payment methods from PPM to direct debit. Ofgem will also consult on strengthening consumer protections over security deposits to either put an end to their use, or if they are appropriate, provide clearer guidelines for suppliers.

Ofgem is committed to helping those consumers who can’t switch or do not wish to switch from a prepayment meter. More suppliers than ever are offering PPM tariffs, but there is limited choice overall compared to direct debit and standard credit. Some suppliers identified technical barriers to lack of tariff choice for PPM customers, and Ofgem is investigating this to help consumers access more competitively-priced energy.

Philip Cullum, partner at Ofgem, said: “Ofgem is concerned that charges and costs for using a PPM fall on those least able to afford them. That’s why we want to remove barriers, deliver greater protections and offer more choice for prepayment customers to ensure they’re able to find the best possible deals. We are calling on suppliers to work with us to abolish charges as soon as possible.”

“There are already good savings to be found in the energy market at the moment. Consumers can save up to £300 when switching from PPM to direct debit. Those looking for independent advice on shopping around should visit Ofgem’s Be an Energy Shopper website.”

Notes to editors

1. The Report

Ofgem has published its prepayment review.

Ofgem has shared the findings of the prepayment review with the Competition and Markets Authority (CMA) which is carrying out an investigation into the energy market.

2. Quick facts on PPMs

  • 15% of all energy consumers in GB are currently using prepayment meters.
  • The average PPM dual fuel bill in 2014 was £1266.
  • 300,000 new electricity PPMs and 320,000 new gas PPMs were installed in 2014.
  • Around 10% of PPM customers are in debt to their energy supplier.
  • There are currently four fixed tariffs available for prepayment customers, and 20 gas and 22 electricity standard variable PPM tariffs.

For further press information contact:

Dafydd Wyn 020 3263 9943
Mark Wiltsher 020 7901 7006
Out of hours media contact number 07766 511470