Thousands of energy customers across the UK are in line for further compensation payments following a major review by the energy regulator, Ofgem, into how prepayment meters (PPMs) were installed. Eight energy suppliers have committed to a substantial £18.6 million package, providing compensation and debt write-offs for thousands of affected customers. This compensation payout is specifically for those who were impacted by issues surrounding the involuntary installation of PPMs, where meters were fitted without valid consent, often under warrant, or where smart meters were remotely switched to prepayment mode. The core of the issue revolves around concerns that some customers, including those in vulnerable situations, had prepayment meters fitted inappropriately or were not given the necessary support when they were struggling with energy debt.
The latest compensation package is in addition to an approximate £55 million that suppliers had already provided in financial support, including hardship payments and debt write-offs, before Ofgem's review was formally completed. This latest action by Ofgem aims to ensure that energy suppliers are held accountable for their failings and that affected customers receive fair treatment and compensation for the difficulties they may have experienced. Tim Jarvis, Director General, Markets at Ofgem said, "This has been one of the most detailed reviews of supplier practices in Ofgem’s history looking at tens of thousands of cases. It has taken time, but our priority has been to put things right for those who weren’t treated properly, and ensure we don’t see bad practice repeated".
Why is compensation due?
Prepayment meters require customers to pay for their energy upfront. While some customers choose this method, PPMs are also sometimes used by energy suppliers as a way to manage debt when customers have fallen behind on their bills. The involuntary installation of a PPM, or the remote switching of a smart meter to prepayment mode, is typically considered a last resort by energy companies. Ofgem’s Market Compliance Review (MCR) provided an investigation into these practices. The regulator examined over 150,000 individual cases where prepayment meters were involuntarily installed between January 2022 and January 2023. This figure includes meters that were physically installed under a warrant obtained by the supplier, as well as smart meters that were switched to prepayment mode remotely, without a home visit.
Ofgem's investigation brought several serious issues to light regarding how energy suppliers handled the installation of prepayment meters and the support offered to customers in debt. The review found that in a "limited number of cases, a prepayment meter was fitted under warrant when it was not safe or reasonably practicable". More broadly, Ofgem determined that "a number of customers were affected by suppliers' processes falling short".
Prepayment meter customers due compensation
As a result of the review, eight energy suppliers have committed to a new package of financial redress totalling £18.6 million. This is broken down into £5.6 million in direct compensation payments to customers and an additional £13 million in debt write-offs for those who had an involuntary PPM installed during the assessment period.
Which energy suppliers are due to pay out compensation?
The following eight energy providers have agreed to compensation and debt write-offs:
- Octopus (includes inherited cases from Bulb and Shell)
- EDF
- E.ON
- Utility Warehouse
- Scottish Power
- Ocotricity
- Good Energy
- Tru Energy
Ofgem states that "at least 40,000 customers" are expected to benefit from this new compensation commitment. Further enforcement investigations are continuing, impacting customers of British Gas, Ovo and Utilita. This could result in tens of thousands more customers being due compensation.
Who is eligible for compensation?
Eligibility for this specific round of compensation is tied to a specific period. Customers who had an involuntary prepayment meter installed between 1st January 2022 and 31st January 2023 may be eligible. This includes both traditional PPMs that were physically installed (often under a warrant) and smart meters that were remotely switched to prepayment mode during this 13-month window.
While this current compensation scheme relates to eight suppliers over a specific period, Ofgem's work is ongoing, stating that it "expects to provide further details on the Market Compliance Review (MCR) outcomes in the summer", which may provide clarity for customers of other suppliers and those affected outside of these specific dates.
How much compensation are you due?
Ofgem has developed clear compensation guidelines for affected customers. The compensation varies depending on the nature of the issue and severity. Below, we provide a breakdown of the compensation amounts payable:
| Issue Identified by Ofgem | Compensation Amount |
| Process misalignment, data quality, and record-keeping issues | £40 - £60 |
| Insufficient debt support provided | £250 |
| Unfair customer treatment | £250 |
| Customer vulnerability not properly considered | £500 |
| Inappropriate installation, switch, or use of PPM | £1,000 |
Source: Ofgem
How to claim compensation
Affected customers do not need to take any action in order to receive a payout, the compensation will be paid directly into customer accounts. Ofgem has confirmed that "Customers identified as having had a PPM wrongly installed or where processes were not adequately followed during this period will be contacted directly by their suppliers". For some customers, this will also include having a portion of their outstanding debt written off by their supplier. While suppliers are responsible for making contact, customers who believe they were affected by a forced PPM installation between 1st January 2022 and 31st January 2023 should keep an eye on communications from their energy supplier. This will ensure they don't miss any important updates regarding any compensation they are due, including how the payment will be made.
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