Ofgem Proposes New Emergency Credit Rules
UK energy market watchdog Ofgem is launching a consultation into providing stronger support measures for prepayment customers struggling to meet their gas and electricity costs.
Under new proposals, energy providers would be required to offer emergency credit, allowing customers to continue receiving gas and electricity when they temporarily run out of money or cannot get to their local shop or post office due to mobility issues or self-isolation.
Around four million homes across the country - that’s 15% of the UK population - depend on prepayment meters. These households are usually more likely to be living in vulnerable circumstances and at greater risk of fuel poverty, due to paying over the odds for their energy supply. According to Ofgem, around one in seven self-disconnected their supply over the last year.
During the early stages of the COVID-19 lockdown, many suppliers supported additional measures for prepayment customers, such as posting pre-loaded keys and cards, adding emergency meter funds automatically and allowing a third party to top-up on their behalf.
To find out more about any additional assistance your supplier is providing during lockdown, visit Help for Prepayment Customers
The energy watchdog now wants to further these measures, proposing ‘friendly hours’ and emergency credit for when customers run out during evenings, weekends and public holidays when shops and post offices are often closed.
Many suppliers do currently offer similar support to their customers in the form of £5 emergency credit, but Ofgem is seeking to make it a licence requirement.
Additional emergency credit for most vulnerable
Energy providers would also be obliged to offer additional emergency credit to vulnerable customers, such as those who are self-isolating or with limited mobility. Repayment rates would be set according to the customer’s ability to pay.
Chief executive of Ofgem, Jonathan Brearley, said: “These permanent protections will reduce the number of prepayment customers temporarily going without energy because they cannot afford to top up.
“It is always best for customers to keep up with their energy bills if they can. But at this time when many may face financial hardship, these proposals mean those who are struggling to keep up are assured of some breathing space.
In addition to its emergency credit plans, Ofgem has also proposed that energy providers increase the support given to customers who struggle with gas and electricity costs during the winter months. Following the results of the consultation, the new measures could be in place by the end of the year.
Prepayment customers paying over the odds
Customers on prepayment meters often pay well over the odds for their energy supply. In fact, on average, prepayment energy tariffs can work out to around £200 more expensive per year than a standard tariff paid by direct debit.
While we highly recommend switching to a credit meter where possible, for those who remain on prepayment plans, we suggest speaking to an energy expert to see if you could still save money by changing your tariff.