Thousands of energy customers across the UK are poised to receive compensation payments of up to £1,000 each, after a landmark regulatory investigation found significant failings in how prepayment meters were forcibly installed in homes. Eight energy suppliers have been directed to distribute a combined £74 million to affected households. This follows mounting concerns over the treatment of vulnerable individuals, some of whom were left struggling to manage rising debts and harsh disconnection tactics.
The investigation, led by Ofgem, was initiated in response to widespread reports about energy firms switching customers struggling with payments onto prepayment meters—sometimes with little notice or, in the most serious cases, by forcibly entering their homes. The list of firms now compensating customers includes major players such as Scottish Power, EDF, E.ON, Octopus, Utility Warehouse, Good Energy, Tru Energy, and Ecotricity.
Compensation amounts will depend on the severity of the treatment received by each customer. Initial payments start at £40, but can escalate to £250 or £500 for those who endured particularly poor treatment. The highest compensation of up to £1,000 is reserved for cases labelled as “inappropriate installation”. Ofgem has assured those affected that compensation will usually be applied automatically to their energy accounts, with several companies already reaching out to notify eligible customers.
To date, £55 million has already been distributed as immediate financial support. An additional £5.6 million will directly compensate around 40,000 customers most severely impacted, while a substantial £13 million has been earmarked to clear the outstanding debts of those affected. The watchdog is simultaneously continuing to scrutinise the actions of British Gas, Utilita, and Ovo, making clear that further compensation may follow as the inquiries unfold.
The roots of this issue can be traced to a damning exposé in 2023 that revealed debt collection agents resorting to aggressive and, at times, illegal measures—including breaking into homes—to fit prepayment meters. The subsequent outcry prompted Ofgem to tighten rules, expressly forbidding the automatic installation of prepayment meters in households where occupants are over 75, have children under two, or if a resident suffers from severe health problems.
Energy UK, which speaks on behalf of energy suppliers, commented that making the switch to prepayment meters had often been seen as a “last resort” after all other debt recovery attempts failed. However, the trade body acknowledged that pushing customers into further debt has negative consequences, not just for those directly involved but also for wider energy prices across the market.
Joining the chorus of concern, Energy Secretary Ed Miliband stated, “Justice is finally being delivered to many families, including the vulnerable, who have suffered as a result of aggressive and unjust practices by energy suppliers.” He highlighted that government pressure has seen the total compensation package rise to £18.6 million, a significant leap from only £420,000 previously available. Mr Miliband further promised more extensive reforms “in the weeks ahead” as part of a renewed effort to protect consumers and drive accountability within the sector.
Alongside the imposition of compensation, UK households are set to benefit from an imminent reduction in energy bills. Ofgem has confirmed a 7 per cent cut in the energy price cap, dropping average annual costs from £1,849 to £1,720. For those using prepayment meters, the annual charge will decrease from £1,803 to £1,672, and for pay-on-receipt customers, bills will fall from £1,969 to £1,855. However, officials have reminded consumers that the cap limits unit prices for energy rather than the total possible amount payable.
The recent moves reflect a broader shift towards greater protection for energy users as the cost of living crisis endures. Advocacy groups and government officials alike have applauded the efforts thus far, while urging continued vigilance and ongoing improvements to regulation.
As further details are awaited from the ongoing investigations, customers are encouraged to check with their suppliers regarding their eligibility and ensure their contact details are updated to enable swift receipt of any compensation owed. Unquestionably, these latest developments mark a significant victory for consumer rights campaigners and a pivotal moment in the regulation of the UK’s energy industry.