Vulnerable consumers are at the centre of another energy scandal. Ofgem has to act

The regulator says it has evidence of providers remotely switching consumers with smart meters onto expensive pre-payment energy plans,, writes James Moore

Energy suppliers have been unilaterally switching vulnerable consumers on to pre payment plans, Ofgem has revealed (PA Wire)

Energy suppliers have a spotty reputation with the public at best but the latest revelations about the way the industry is dealing with some vulnerable consumers threaten to put it in the dustbin alongside payday lenders, door-to-door salespeople, Gavin Williamson and Liz Truss.

Got a smart meter? Be afraid. Be very afraid. It has emerged that energy providers have been using the technology to unilaterally switch customers in arrears onto costly pre-payment plans.

The sector’s regulator Ofgem has confirmed that it has received reports of vulnerable customers “being left without power for days or even weeks” through this. It is typically poorer consumers who end up with these plans, which contribute to Britain’s poverty premium.

There have always been provisions to allow energy suppliers to enforce a switch. But with traditional analogue meters, there is a process they have to go through to get this done, including securing access to the consumer’s home.

In the case of smart meters this appears to have been happening without any sort of process, simply through the provider flipping a switch, leaving those on the receiving end with little choice but to scramble for whatever warm clothes they can find. That in itself should be enough to give a chill to anyone with a conscience. However, it is particularly troubling that this has been allowed to happen with smart meters.

These should be of benefit to vulnerable consumers and those in financial difficulty, whose numbers have regrettably been rising sharply as the cost of living crisis bites down with the power of a saltwater crocodile. A smart meter provides real-time information on how much energy a consumer is using – which can be viewed via an in-home display.

National Energy Action (NEA), the fuel poverty charity, notes that they can facilitate householders being switched from prepayment to credit meters if there is a risk they’ll experience health problems if they go off supply. This can also occur if they have challenges accessing government support, meaning they can get financial help more easily.

Smart meters do away with bills based on inaccurate estimates, with all the very obvious problems they can cause, and put the emphasis on energy saving. Good for the consumer (obviously) but also more widely at a time when the government has been war-gaming for potential blackouts.

But the revelation that they can be used to remotely change tariffs without prior notice raises questions. “There is no excuse for poor customer engagement or leaving people at risk of disconnecting themselves from supply,” NEA director of policy Peter Smith says in response.

Just so because this is enough to make anyone baulk, let alone vulnerable consumers. For its part, Ofgem says the behaviour it has found breaches its rules and “shouldn’t be happening”. It has written to suppliers to “remind them of their obligations” ordering them to urgently look into the issue.

“We won’t hesitate to take action off the back of this work where failings are found,” says the watchdog, which has told suppliers that they “must have effective checks and balances in place when switching the mode of a smart meter”.

Poor behaviour needs to be tackled, all the more so given the trail of devastation left by the energy price spike, which resulted in multiple bankruptcies among small suppliers. Those closures have helped to facilitate a return of the “big six” to their dominant position, reducing the competitive pressure.

Those advocating for nationalisation may feel more justified in doing so. This is the sort of thing that could move the needle.

So Ofgem has work to do. The regulator is currently in the throes of a review of the market and its practices. The results will be published and I’m told the poor performers will be highlighted, with each set to be handed a rating. This should prove illuminating. However, what has emerged here is simply scandalous. It demands a hard response.