Regulator Ofgem is to stop gas and electricity suppliers from charging as much as £900 when they forcibly install pre-payment meters in households struggling to pay bills.
The change will affect the tens of thousands of consumers who are each year subject to court warrants allowing suppliers to install the meters in their homes, because they owe money.
Consumers may then be charged for the installation – but Ofgem now says that from next January the charges will be capped at £150, and banned in the cases of the most vulnerable.
Rachel Fletcher, Ofgem’s senior partner for consumers and competition, said: “At the moment vulnerable customers face a double blow when they’re hit with high warrant charges on top of existing debt – risking making their situation worse.
“The measures will protect all consumers, including the most vulnerable, from experiencing unnecessary hardship due to having a meter installed under warrant.”
She said using a warrant to install a meter must be used only as a last resort and that suppliers should instead be stepping in early to help customers manage debt through repayment plans.
Figures last month showed some companies were allowing customers to build up arrears of more than £800 on their bills before intervening.
Ofgem said that currently suppliers charge dual fuel customers an average £400 – which can include court costs – for installing pre-payment meters under warrant, but that the charges could range up to £900.
However, some suppliers waive charges in many cases, the regulator said.
In 2016, 40,000 gas prepayment meters and 41,000 electricity prepayment meters were installed under warrant.
Ofgem earlier this year introduced a price cap to protect millions of customers who use these meters from overpaying for their energy and later said it would lower the level of the cap from October.
The latest intervention into the market comes after a report by the Competition and Markets Authority last year found the UK’s “big six” energy suppliers were overcharging customers by up to £1.4bn a year.
Meanwhile, the Government has announced plans for a price cap on the broader energy market to protect customers from rip-off bills.
Earlier this week it was announced that two of the major energy companies, SSE and npower, had agreed to merge their supply operations to form a new business – partly in response to the changes facing the energy sector.