Ofgem's new code of practice leaves the door open for forced prepayment meter installs in vulnerable homes

Ofgem have announced a new ‘code of practice’ for the installation of prepayment meters (PPMs) that has been agreed with energy suppliers. Ofgem states that “the code sets out strengthened protections for the most vulnerable customers for whom PPM may not be a safe option, alongside standards for those customers who are currently on PPM or may be moved to PPM.” Unfortunately, the code sets out a questionable distinction between high risk and medium risk groups which leaves the door open for forced PPM installs in the homes of vulnerable people. CIH policy and practice officer Matthew Scott examines the detail of the code.

Ofgem’s new code sets out the rules that energy suppliers should follow when considering the forced installation of a PPM inside people’s homes. There is much to debate about the code, especially the need for it to be incorporated into supplier license conditions as soon as possible, but one of the key distinctions it makes is between two different groups of vulnerable households. This distinction is worrying and requires unpacking.

The first group is defined as high risk, which means a PPM should not be installed, and the second group is defined as medium risk, which means suppliers must undertake further assessments on a case-by-case basis to determine whether a PPM should be installed. Put differently, the code means that energy suppliers cannot install a PPM in the high risk group and cannot consider installing a PPM in the medium risk group unless the possible consequences have been properly investigated.

However, there are some unwelcome ambiguities in the code. Most notably, the code does not adequately address what is meant by risk. ‘Significant consumer harm’, ‘detriment’, and ‘going off supply’ are all mentioned in context of risk, but there is no firm definition of risk stated anywhere in the code. Arguably, self-disconnection or ‘going off supply’ is not in itself the main risk; the main risk is clearly the harm or detriment that is caused by self-disconnection.

This is approached differently in the two groups. In the high risk group, it is clear that main risk is the risk of death from the cold, or through not being able to access essential medical equipment that requires an uninterrupted electricity supply. In the medium risk group, it is much more ambiguous. The risk of harm, of course, must also be balanced with the other side of the equation, the (legitimate) need to recover debt and avoid further debt, and the risks of not doing so.

Despite this, there do not seem to be any cases where that need outweighs some of the potential harms or detriment associated with self-disconnection in the groups defined as medium risk in the code. To take one example, there is increasing evidence on links between cold homes and poor educational attainment. The latest report from Professor Sir Michael Marmot’s Institute of Health Equity, for example, highlights that children are more likely to miss days at school or be unable to complete homework if they live in a cold or underheated home. Given that attainment acutely shapes social and economic mobility, forcibly installing a PPM in any household with children risks ‘significant consumer harm’ or ‘detriment’.

This also applies to groups defined in the code as having ‘serious mental/developmental conditions’. There is now considerable evidence on the links between mental ill-health and fuel poverty, and some evidence that a lack of access to adequate energy services (e.g. heating, lighting, cooking) has detrimental impacts for children and families with autism. The code also references ‘other serious medical or health conditions’ such as COPD and osteoarthritis, all of which are exacerbated by being unable to heat a home during periods of self-disconnection. Finally, as the code also recognises, if a household is at the point of needing a PPM installed in the first place, it is very likely they are in financial peril to the extent that it is likely they will at some point self-disconnect from supply.

As a result, the evidence is clearly such that there is a serious enough risk of harm or detriment from an eventual likely self-disconnection in every group defined as ‘medium risk’ to essentially make forced PPM installs in that group impossible. The evidence, only some of which is included above, makes it untenable to reach any other conclusion. Moreover, this evidence also collapses the need for a distinction between high and medium risk groups altogether. Conceptually, it is unintentionally based on a distinction between mortality (risk of death) and morbidity (the extent or condition of suffering), and prioritising the former over the latter.

Of course, vulnerability to the cold and to the harms of self-disconnection is complex. Defining vulnerability is like hitting a clay pigeon with a bow and arrow. But the evidence is clear that no household defined as vulnerable should have a PPM forcibly installed. The risk of harm, whether death or other pernicious outcomes, outweighs any contrary case.

It would have made more sense to extend the ‘do not install’ part of the code to all vulnerable groups, instigate a process to add this to license conditions, and then move on to the next questions – specifically how to tackle existing energy debt and how to make energy (and living) affordable to the extent that PPMs aren’t required as a debt recovery mechanism in the first place.

Unfortunately, the code leaves open the possibility of suppliers installing PPMs in the homes of vulnerable people, and as the practice restarts over the summer and leading to next winter, it seems inevitable that Ofgem will have to revisit this sooner or later. As a member of the End Fuel Poverty Coalition CIH will continue to advocate for a ban on all forced installation of PPMs and for a social energy tariff.