Member Article

Ofgem proposes to cap Prepayment Meter Installation Fees

The energy regulator Ofgem has proposed to reduce the installation fees of pre-payment meters for vulnerable consumers. As per records, around 4.5 million people have these meters for electricity while 3.5 million have them for gas. The installation charges for these meters along with the expenses for court procedure would end up to £900.

These charges would be too expensive for customers that are already in debt and cannot afford their energy bills. For them, Ofgem has decided to cap the installation charges. According to it, the installation charges should fall in a ‘firm limit’ of £100 or £150. To be activated from April 2017, the meters would save the customer at least £75 a year.

The energy regulator has also proposed an absolute ban on charging from customers that have difficulties in learning or suffer from mental or physical issues. The supplier can charge installation charge plus warrant cost, which includes the court costs. As per reports, last year there were around 86,000 meters installed under warrant.

Welcoming this news the Director of FreePriceCompare.com, Mr. Shay Ramani said that “It is a very good initiative to support people who are susceptible to incur energy debts. By capping installation fees, government has increased the chances of installation of pre-payment meters and made it easy for the vulnerable energy customers.”

Each installation incurred a charge of £400 plus court charges making it a total of £900 for each customer. The concern is that such charges would push the already vulnerable customer into higher debt. To counter such things, the energy regulator has come up with the solution of capping the installation fees.

According to authorities of Ofgem, “It’s deeply unfair that struggling customers get hit with high warrant costs when they’re already grappling with debt, doubly penalising them”.

“Ofgem’s role is to protect every consumer, including the most vulnerable. Suppliers need to help customers manage their debts”.

“Suppliers need to ensure that PPMs are only installed under warrant as an absolute last resort. Where they are needed, our proposals will protect customers by limiting PPM warrant charges for all customers and removing them for the most vulnerable.”

Responding to the proposal, The Competition and Markets Authority (CMA) has ordered to execute a price cap on installation charges from April 2017. Customer helpline organization Citizens Advice has welcomed this proposal from Ofgem and foresees positive results in 2017.

This was posted in Bdaily's Members' News section by Shay .