British Gas must pay £112m for force-fitting prepayment meters in the homes of vulnerable customers, following an investigation by the energy regulator Ofgem.
On top of a £20m penalty into Ofgem’s voluntary redress fund, as much as £70m of energy debt will also be written off and £22.4m will be provided as part of a voluntary support package, bringing the total potential bill for British Gas to more than £112m, four times the previous record settlement.
The announcement from the energy regulator comes at the end of one of the most detailed and complex investigations in its history, ultimately deciding that British Gas had breached licence conditions designed to protect vulnerable customers.
Tim Jarvis, Ofgem’s chief executive, said: "It is clear that British Gas fell short in its treatment of an unacceptable number of vulnerable customers who had a PPM [prepayment meter] installed without consent, and it’s right that they’ve taken action to put things right. Because of our action customers will receive a substantial package of redress, compensation and debt write-off."
What is the prepayment meter scandal?
Millions of households in the UK are in debt to their energy provider. One of the steps providers can take to cover arrears is to install a prepayment meter (PPM) in someone's home, essentially forcing them to pay for their energy before they use it. In some cases, these have been installed without the customer's permission and without them allowing access to their home.
A 2023 investigation by the Times first uncovered the scale of the practice, with an undercover reporter observing agents working with a locksmith to force their way into the home of a single father of three to install a prepayment meter on behalf of British Gas. 40,000 customers are believed to have had a prepayment meter installed without permission between 2022 and 2023, before an Ofgem investigation led to the practice being temporarily banned.
Why are British Gas customers due compensation?
Ofgem has concluded that British Gas breached licence conditions designed to protect vulnerable customers. People who were in energy bill arrears had their homes broken into so that debt agents acting for British Gas could install a prepayment meter, even if they were elderly, lived with young children or were otherwise considered vulnerable.
The regulator discovered that these forced installations took place between February 2018 and February 2023, even though British Gas noted the practice was not appropriate in an external review in 2018 and an internal audit in 2021.
The utility giant will now have to:
- Compensate customers who had a meter fitted between 2018 and 2021, in addition to compensation already paid to customers affected between 2022 and 2023
- Write off up to £70m of vulnerable customers' energy debt, though some of this forgiveness will be considered compensation
- Continue the £22.4m voluntary support package for prepayment customers launched in 2023
- Create a dedicated Vulnerable Customers Debt Advisory Panel within British Gas
There has not been confirmation of how many people should expect a payout or exactly how eligibility will be determined. This is because Ofgem used a sample of British Gas customers to determine the scale of the problem, leaving British Gas to identify exactly which customers were affected. The company has committed to undertaking a comprehensive review of its customer records to do so.
Ofgem has said customers who are due compensation will be contacted directly and do not need to take any action.
Will other energy suppliers have to pay compensation too?
This was an industry-wide scandal that was not limited to British Gas customers. A separate Ofgem investigation has already found that ScottishPower, EDF, E.ON, Octopus Energy, Utility Warehouse, Good Energy, TruEnergy and Ecotricity failed industry standards.
Martin McCluskey, the minister for energy consumers, said: "Consumers deserve an energy market they can trust. That trust was broken for too many families affected by the forced installations of prepayment meters, which was an unacceptable national scandal."
How to avoid having a prepayment meter fitted
Despite this scandal, it is still possible for a provider to install a prepayment meter without consent, so long as a court-issued warrant is in place and a welfare check is conducted. Ofgem's 2023 blanket ban lasted less than a year, though it remains in place for homes with young children or residents over the age of 75.
Britain's total energy debt is around £5.5 billion, with millions of households in debt to their energy supplier and at risk of falling into dangerous levels of arrears.
A prepayment meter can leave you unable to cook or heat your home if you run out of money, so even though scandals like this may put you off, the best first step if you are struggling to pay your energy bills is still to contact your provider as soon as possible. Individual energy suppliers are expected to help customers arrange an affordable repayment plan if the cost of energy is becoming overwhelming. We explain all the next steps to follow in our article 'What to do if you’re struggling to pay your energy bills'.
To keep your bills as low as possible, read the tips in our article 'How to save money on your energy bills'. There are also a number of grants and schemes available for those who are most vulnerable. More information and help on the cost of living can be found in our Cost of Living guide.
MTTM AI (beta) 
