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Smart meter users could be moved to ‘pay-as-you-go’ if they cancel direct debits

·3-min read
Smart Meter Energy Crisis Inflation Cost of Living Ofgem
Smart Meter Energy Crisis Inflation Cost of Living Ofgem

Households with smart meters could find themselves moved onto prepayment plans without their consent if they refuse to pay their energy bills.

A growing movement to shun rising energy bills in the autumn has gathered momentum, however, participants could find themselves forced to pay for energy up front within weeks.

Don’t Pay UK, a campaign group, has urged households to stop paying energy bills from Oct 1. More than 100,000 people have “pledged” to withhold payment. Households traditionally pay for energy in arrears, settling bills via direct debit or on a monthly or quarterly basis.

However, energy companies can switch smart meter users to prepayment with minimal notice and not have to enter a home.

More than half of all meters are either smart or advanced, according to the most recent Government statistics. Roughly 14 million households could therefore have meters changed remotely.

Providers have historically had to obtain a warrant to enter households and replace a meter with a prepayment alternative – where customers must add credit to their account before being allowed to use gas and electricity.

This is a significantly longer and more expensive process, but 61,000 warrants were still issued last year despite these obstacles, a Freedom of Information request has shown.

The need for a warrant does not apply when suppliers are switching smart meters to prepayment mode remotely. However, Ofgem, the energy regulator, has said suppliers must give customers four weeks to settle debts, and a further week’s notice before switching.

Ofgem has strict rules on converting customers to prepayment. A supplier must take a customer’s financial circumstances into account and they should also be allowed to repay debt over a number of months, before turning to prepayment. However, it is not clear whether wilful non-payment, rather than due to financial difficulties, will void these rules.

An Ofgem spokesman said: “Suppliers are required to check if it is safe and reasonably practicable to offer a prepayment tariff, potentially through a site visit, and must notify consumers of any change in payment mode and how to top up.

“We expect suppliers to use the remote switching facility fairly and appropriately and are monitoring how suppliers are complying with these requirements.”

Millions of homes will have smart meters installed in the coming years. The national rollout, which aims to have the devices installed in all households by the end of 2025, has proved hugely controversial.

It has also been disrupted by the global shortage of microchips which has left energy companies unable to meet their installation targets and facing multi-million pound fines.

The growing movement to withhold energy bills began in July, following predictions the price cap, which limits how much suppliers can charge customers on their standard variable rate, could rise to £3,600 a year from October. In January, the cap is forecast to rise even further – to £4,200.

The campaign group’s following swelled by 65,000 this week, according to analytics website Socialblade, after it was cited by Martin Lewis and Dominic Cummings as evidence of civil unrest regarding the energy crisis. In July, Mr Lewis warned the country could be heading for a “Poll Tax moment” if the Government did not intervene.

However, experts have warned that a protest over energy bills could backfire – and result in the price cap rising even further, pushing up energy bills beyond current predictions.

Chaitanya Kumar, of the New Economics Foundation think tank, said it would only take “a few thousand” households halting energy bill payments for a “ripple effect” to be felt by energy providers. “The balance sheets of these companies were already quite poor and could get worse,” Mr Kumar explained.

“I’d imagine suppliers’ accounts would start haemorrhaging quite a bit. Ofgem increased the price cap primarily to protect suppliers, so if people just stopped paying, the Government would have to intervene.”