Ofgem makes it easier for prepayment customers in debt to switch

Ofgem has announced a package of measures agreed with suppliers, which is designed to increase the number of prepayment meter customers switching supplier. This includes increasing the  threshold for the amount of debt that can be switched between suppliers from £200 to £500, increasing awareness of the ability to switch and improving the processes through which customers switch.

The main six suppliers have voluntarily agreed with Ofgem to increase the debt limit from November 1, enabling prepayment meter consumers with a debt of up to £500 to switch supplier if they so choose. The move will help tens of thousands of people who were previously outside of the debt threshold.

These measures are part of Ofgem efforts to encourage suppliers to proactively resolve debt issues and use disconnection only as a last resort. Ofgem's annual social obligations monitoring is due to be published later this week and will show signs of improvement in supplier behaviour. The annual figures for 2011 show a significant decrease in the number of people being disconnected from their energy supply (a reduction of 54% for electricity and 59% for gas).

There has also been an increase in the amount of time given for customers to repay debts. The report also shows that overall in Britain the number of people in a repayment plan repaying a debt fell. Despite this fall the figures show that energy debt remains a problem, with more than 315,000 electricity, and 320,000 gas, prepayment meter customers in debt. The average level of debt being repaid stands at £357 for electricity down from £360 in 2010 and £371 for gas, up from £339 in 2010.

Sarah Harrison, Senior Partner - Sustainable Development said "We are acutely aware of the increasing financial pressures faced by many consumers, particularly those who are in the most vulnerable circumstances.

"We welcome the significant falls in the number of households being disconnected, but Ofgem remains determined to ensure suppliers continue to focus on helping consumers manage their energy bills and reduce their debt. That's why we are pleased to announce a commitment from major suppliers which will permit tens of thousands more prepayment meter consumers in debt to choose the cheapest energy deal."