The energy watchdog will be given powers to examine companies’ behaviour and actions directly with consumers following the prepayment meter scandal.
Grant Shapps, the business secretary, said that Ofgem had had “the wool pulled over their eyes” after taking at face value what energy companies were telling them about customers who had fallen behind with their bills. He said Ofgem had not listened to customers and the regulator needed access to go directly to customers to find out if there was malpractice.
Shapps also said there needed to be a better response from Ofgem to customers after figures revealed there were 33,000 complaints lodged with the regulator about prepayment meters last year. He has told Ofgem it must crack down on suppliers and said it was not good enough for the watchdog to trust assurances by energy companies that they were following the rules.
It follows an undercover investigation by The Times which revealed that vulnerable customers, including people who were disabled or mentally ill, were being forced by British Gas on to pay-as-you-go meters. Some customers who could not have prepayment meters fitted had their gas switched off altogether. Energy companies are only supposed to use pre-payment meters as a last resort and must not impose them on vulnerable customers.
Shapps has ruled out banning prepayment meters because some households chose to have them. He said his son, who is 21 and lives in a flat in London, found pay-as-you-go meters “very convenient”, adding: “There are situations where you want to be able to have that kind of flexibility so I don’t think we should be banning all prepayment meters.”
He has also given energy companies a deadline of Tuesday to report back on what remedial action they will be taking, including compensation, in response to force-fitting pre-payment meters on vulnerable customers.
He told Sophy Ridge on Sunday on Sky News that the actions of British Gas contractors were “absolutely disgraceful” and “completely wrong”.
He said: “I also think that the regulator, Ofgem, have had the wool pulled over their eyes because I had already made clear to them that they need to be making sure that the energy providers weren’t carrying out this outrageous behaviour.
“They were invading somebody’s home and forcibly changing the meter to a prepayment meter — that’s not right at all.
“Unfortunately, what the regulator was doing was going back to the energy company and saying, ‘Are you following all the rules?’, and the energy company said, ‘Oh, yes, yes, yes, don’t worry’.
“These kind of abuses are not on. I’ve called for all of the energy companies to stop this process as British Gas have and as others, such as Ovo, had stopped some time ago, and I want to make sure that this does not occur in Britain.”
Ofgem said it was shocked at the findings of The Times investigation and that it had ordered British Gas to cease all warrant activities until it could demonstrate compliance with its standards and requirements.
“Our compliance reviews were launched to assess and drive up standards across the industry,” it said. “Companies are legally required to submit an honest representation of the facts and we required assessments to be signed off by their boards.
“It is an extremely serious matter for any licensee to provide misleading or purposefully inaccurate information as part of these reviews.
“What is clear, as the secretary of state has laid out, is that the picture presented by companies may not accurately reflect what is experienced by customers on the ground. Therefore, further reviews will cross-examine what we have had reported to us with direct reports from customers and wider stakeholders, and potentially those involved in delivery of services.”
Last week Ofgem ordered all domestic energy companies to suspend the system of forcibly installing prepayment meters. Companies can move customers who are behind on their energy bills on to the more expensive prepayment meters but the rules are supposed to ensure that vulnerable customers are exempt.