Ofgem fined Ovo Energy £10.6 million last week for systemic failures in monitoring prepayment meters, the third-largest penalty ever imposed on a UK energy supplier. The regulator found that Ovo failed to identify vulnerable customers who were forced onto prepayment meters or left without adequate support, leading to cases of self-disconnection and debt. For the 4.5 million UK households on prepayment meters, this is not a distant corporate scandal but a direct hit on their finances and energy security.
As reported by The Guardian, Ovo failed to ensure that prepayment meters were installed safely or that customers in financial hardship were offered alternative payment methods. The penalty shows prepayment meters are not just a billing method, they are a vulnerability that can block access to cheaper tariffs and eco-home upgrades.
Who qualifies, and who doesn’t
Prepayment meters are typically installed in households with debt or poor credit, but Ofgem rules require suppliers to check customer vulnerability before fitting them. Ovo did not do this in thousands of cases. The regulator’s investigation covered installations between 2018 and 2023, meaning many households may have been wrongly switched without knowing their rights. Homeowners on prepayment meters pay, on average, £200 more per year than those on direct debit tariffs, according to Energy Saving Trust figures. That premium eats into any savings from energy efficiency measures.
What it costs a typical 3-bed semi
A typical 3-bed semi using 12,000 kWh of gas and 3,000 kWh of electricity per year on a prepayment meter pays around £1,850 annually under the current price cap, versus £1,650 on direct debit. That £200 difference is roughly the same as the annual running cost of a modern air-source heat pump in a well-insulated home. Switching to a smart meter, often free from your supplier, can unlock time-of-use tariffs that make heat pumps and solar panels more cost-effective. But prepayment meters are rarely compatible with smart tariffs, so households stuck on them miss out.
The catch is that suppliers are not obliged to remove prepayment meters if the customer has outstanding debt. However, Ofgem’s enforcement action means suppliers must now offer a repayment plan before forcing a meter swap. Homeowners who want to upgrade to a heat pump or solar should first check their meter type with their supplier. If it’s a prepayment meter, they can request a switch to a smart meter, and if refused, escalate to the Energy Ombudsman.
How this affects EPC ratings and eco upgrades
Energy Performance Certificate ratings are calculated based on assumed energy costs and usage patterns. Prepayment meters inflate the cost of energy in the EPC calculation, because the assessment uses standardised fuel prices that reflect the higher prepayment tariff. That can knock a few points off your EPC score, potentially pushing a property from a C to a D. For homeowners planning to sell or rent, a lower EPC reduces property value and may trigger minimum energy efficiency standards for landlords. A smart meter switch, or a move to direct debit, removes this penalty and improves the accuracy of your EPC.
Ofgem’s penalty against Ovo is a warning to all suppliers: the regulator is watching. Homeowners should use this moment to audit their own meter type, check their tariff, and demand better from their supplier. The £10.6 million fine will go into Ofgem’s consumer redress fund, but the real remedy is in your hands: switch to a smart meter, compare tariffs, and make sure your energy setup doesn’t block your path to a greener, cheaper home.
Households on prepayment meters can request a smart meter free of charge through their supplier. If refused, contact the Energy Ombudsman via ombudsman-services.org. For advice on switching tariffs or upgrading to solar or heat pumps, visit the Energy Saving Trust website. Act now, before winter bills hit.
Frequently Asked Questions
Yes, but the supplier may require you to agree a repayment plan first. Ofgem rules say suppliers cannot refuse a smart meter installation solely because of debt, provided you set up a payment arrangement. If your supplier refuses, you can complain to the Energy Ombudsman.
Yes, indirectly. EPC assessments use standardised fuel prices that reflect the higher cost of prepayment tariffs. This can lower your EPC score by up to 5 points. Switching to a smart meter or direct debit removes this penalty and gives a more accurate rating.
