British Gas to pay £20m over force-fitted prepayment meters scandal

British Gas will compensate customers who had a prepayment meter installed without their permission and issue a £20m payout, regulator Ofgem has said.

The watchdog found that British Gas failed to protect vulnerable customers by forcibly fitting the energy meters into people’s homes before they were paused in 2023.

The energy supplier will compensate customers who were affected from 2018 to 2021, in addition to payments already made to those affected from 2022 to 2023.

It will also write off up to £70m of energy debt for vulnerable customers as part of the agreement.

Those who are due compensation will be contacted by British Gas and do not need to take action, Ofgem said.

The regulator changed the rules on prepayment meters in 2023 after the industry-wide practice was publicly exposed, before launching one of the most complex investigations in its history.

The meters are pay-as-you-go gas and electricity systems that can be topped up online or with a card at certain shops.

When the money in the meter runs out, the electricity and heating shut off.

Three years ago, it was discovered that, at the peak of the cost-of-living crisis, energy suppliers were entering people’s homes to forcibly switch them onto prepayment methods.

Ofgem then paused the practice, but late last year it emerged that magistrates were approving batches of warrants for utility companies to break into people’s homes, including for the fitting of prepayment meters.

Under current rules, suppliers must make at least ten attempts to contact a customer and give at least ten days’ notice of a warrant being applied for before asking a court to approve the fitting of a prepayment meter.

“It is clear that British Gas fell short in its treatment of an unacceptable number of vulnerable customers who had a prepayment meter installed without consent, and it’s right that they’ve taken action to put things right,” Ofgem’s CEO Tim Jarvis said.

“Because of our actions, customers will receive a substantial package of redress, compensation and debt write off.”

He added: “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.”

Jarvis told BBC Radio 4’s Today programme he recognised that “clearly” there also needs to be a “way of recovering money” from people who do not pay their energy bills.

“We’ve certainly seen a very big increase in the amount of debt and arrears in the energy system,” he said, pointing out that “large numbers” of people struggled to pay their bills amid the energy crisis caused by the war in Ukraine.

Chris O’Shea, group chief executive of British Gas owner Centrica, said: “What happened should never have happened, and I am sorry to the prepayment customers who were affected. When we get things wrong, we make them right.

“When these issues came to light in 2023 – we apologised, stopped the activity immediately and took rapid action to improve our processes and change how we engage with customers in debt, particularly those in vulnerable situations.

“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.”