British Gas Faces Record Settlement for Forced Prepayment Meter Installations
Thousands of British Gas customers who had prepayment meters (PPMs) forcibly installed in their homes will collectively receive compensation and energy bill debt write-offs totaling up to £112 million. This represents the largest settlement ever recorded for an energy supplier.
Great Britain’s energy regulator, Ofgem, determined that British Gas imposed PPMs on households struggling to keep up with their bills during the peak of the Russian gas crisis. This investigation is among the most complex in Ofgem’s history.
More than three years after the initial inquiry began, the regulator has mandated a redress package exceeding four times the size of the previous largest settlement, which in late 2015 required British Gas to pay £25 million for customer service failures.
As part of the settlement, British Gas must pay a £20 million penalty into Ofgem’s voluntary redress fund to compensate customers who experienced unfair treatment. Additionally, the company will write off up to £70 million in debt owed by affected customers.
Furthermore, British Gas is required to continue providing the remainder of a £22.4 million voluntary assistance package it introduced following the scandal to support PPM customers.
Ofgem’s Response and Industry-Wide Issues
Tim Jarvis, Ofgem’s chief executive, stated:
“It is clear that British Gas fell short in its treatment of an unacceptable number of vulnerable customers who had a PPM 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.”
Ofgem temporarily suspended forced PPM installations on customers who missed repeated payments after reports in early 2023 by The Times revealed that debt agents working for British Gas ignored signs of vulnerability when fitting meters.
The regulator’s investigation later found that most of Great Britain’s major energy suppliers had forced PPMs on customers’ homes as the 2022 energy cost crisis led many to miss bill payments.
About a year after the British Gas investigation concluded, Ofgem found that ScottishPower, EDF, E.ON, Octopus Energy, Utility Warehouse, Good Energy, TruEnergy, and Ecotricity also failed to meet regulatory standards when installing PPMs to recover unpaid energy debts.
Collectively, these suppliers agreed in May to compensate over 40,000 households with more than £18.6 million in compensation and debt write-offs on energy bills.
Jarvis emphasized:
“The installation of prepayment meters under warrant should only be a last resort, with rigorous checks to ensure debt is recovered lawfully, proportionately and safely.”
“This investigation forms part of Ofgem’s wider work to raise standards across the energy market and strengthen consumer protections. We continue to challenge suppliers to do more to identify and support customers in difficulty and proactively offer support, and our priority remains driving lasting improvements so customers can have confidence they will be treated fairly.”
Scope of the Investigation and Government Response
Ofgem’s investigation focused on a sample of British Gas customers to estimate the proportion who may have been treated unfairly, meaning the full extent of the scandal remains unknown. British Gas has one year to determine the exact number of households eligible for compensation.
Martin McCluskey, minister for energy consumers, commented:
“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.”
McCluskey added that government reforms to the energy market, including plans to strengthen Ofgem, would help ensure such injustices do not recur.
British Gas CEO Apologizes and Commits to Change
Chris O’Shea, chief executive of Centrica, which owns British Gas, said:
“What happened should never have happened, and I am sorry to the prepayment customers who were affected.
Over the last three years, we have treated this matter with the seriousness it deserves and have made changes to our practices and put safeguards in place to ensure we deliver the standards our customers have every right to expect.”
Following the moratorium, the regulator permitted suppliers to resume forced PPM installations less than a year later, although installations in homes with young children or residents over 75 years old remain prohibited.
