Energy: a broken system

By Richard North - November 30, 2022

Just when I thought it was safe to move away from the energy payment crisis, onto other things (like immigration and the census, which I really need to cover), and up pops the Telegraph with a story about prepayment meters.

At first, I thought it was just the paper catching up, as it hasn’t been at the leading edge on this issue, but then I saw the Guardian covering it, illustrating what amounts to a new development in this long-running saga.

Although the Telegraph headlines: “Energy firms accused of using smart meters to ‘disconnect customers by back door’”, which makes it look like an old story rehashed, the Guardian is more on the ball.

This paper, which has been ahead of the game on the issue, announces: “Calls for UK ban on pre-payment meter installations made under court warrants”, with the sub-heading of, “End Fuel Poverty Coalition fears energy suppliers are using warrants to disconnect poorest ‘by the back door’”, which puts the “back door” quote in context.

What we’re seeing is an overdue bit of campaigning activity, where this End Fuel Poverty Coalition – a group of 60 campaign groups and local authorities – is making a pitch for scrapping the power of utility companies to apply for warrants to enable them forcibly to fit prepayment meters.

Additionally, they want to stop utilities converting smart meters to “pay as you go” mode without permission of account holders, fearing that the move to prepayment devices is allowing energy firms to skirt rules that prevent them disconnecting vulnerable people over the winter.

Actually, I think they’re a bit muddled there – the specific winter prohibition on disconnection applies only to pensioners (under certain conditions). For people formally designated as “vulnerable”, there is an absolute prohibition on disconnection at any time of the year.

The problem, as I see it, is that the rules on forcible fitting of prepayment meters are not only complex but they are spread between different sources and administrations, with different legal status spanning different jurisdictions.

And while Citizens Advice (which has a quasi-legal role in this context) does a tolerable job of explaining the circumstances under which prepayment meters can be fitted, mostly based on Ofgem rules, the ultimate arbiters over whether the utilities can go ahead are the Magistrates Courts, over which Ofgem has no jurisdiction.

This is an important element to the story, which is not explained in any of the newspaper reports, although we get some sense of where the system is going wrong from the Telegraph. This has the campaigners complaining that warrant applications are likely being “rubber stamped” by Magistrates’ Courts without being considered on a case-by-case basis – as is required.

In the first six months of 2022, we are told, there were 187,000 applications for these warrants, according to a Freedom of Information request. The sheer volume of applications, suggests the End Fuel Poverty Coalition, makes it “difficult to believe” these warrants are being considered individually.

The trouble here is that the Magistrates Courts work to the Rights of Entry (Gas and Electricity Boards) Act 1954 (as amended) which is still in force. To say that it is both vague and ambiguous is no exaggeration.

Section 2 states that the magistrates have to work to “sworn information in writing” from the utilities, that access is “reasonably required”, that they are entitled to fit the meters and that “the requirements (if any) of the relevant enactments have been complied with”.

Given that very few magistrates are fully up to speed with the requirements, and in any case Ofgem rules are not statutory enactments enforceable by the courts, the suspicion is very much that the courts take the lead from the utilities and give them the warrants they ask for, with very little if any scrutiny.

The worst of it is that the Courts have a significant financial interest in not looking too closely at the applications. Under the Magistrates Court Fees (Amendment) Order 2014, they get paid £20 per application. If, as the Guardian avers, they are processing something like 20,000 applications a month, this is a very lucrative business, raking in something like £400,000 a month to the court system.

But if each application was subjected to detailed scrutiny, the volume of business would quickly take up most of the court resource, eroding margins and putting a severe strain on an already hard-pressed system. Thus, there is no incentive for Magistrates to do their job properly, and considerable pressure for them to take short cuts.

Actually, this is not the first instance where we see the courts failing to do their jobs properly. Back in 2011, through to 2013, I was writing about the unlawful overcharges on Council Tax summonses and liability orders.

This was (and still is) a situation where hundreds of thousands of summonses were being processed in bulk by Magistrates Courts each year, for £3 a pop, earning them millions in fees for next to no input – contrary to established case law, leaving Council to charge anything up to £125 each for sending them on to their destinations by post.

A few years ago, I made a determined effort to get something done about this, contacting all the major debt charities offering to front a test case so that this abuse could be brought to courts, but none of them were interested.

Yet, here we are again, with another example of the courts raking in the fees, to the detriment or hard-pressed bill payers, abrogating their wider responsibilities – a broken system acting as a cash machine for the establishment.

Nevertheless, the End Fuel Poverty Coalition sees this mainly as a problem of grasping utilities keen to protect their own revenues, and it is hard not to have sympathy with this view.

This is especially the case when we see energy suppliers getting paid billions up front by the government, to allow them to keep to the cap set by the Energy Price Guarantee, yet they impose draconian sanctions on late-paying customers to further preserve their cash flows.

In essence, though, the restrictions on forcibly imposing prepayment meters are so extensive that, if the system was working properly, it is unlikely that the utilities could reach a fraction of the instalment rate they are currently implementing.

In my view, therefore, much could be gained by codifying the various restrictions and provisions in one, comprehensive statute, setting out with great clarity the conditions which must be satisfied before a warrant of entry can be issued. The courts might also be asked to judge whether a smart meter should be converted to “pay as you go”, thus closing an egregious loophole.

This might temporarily increase the workload of the courts, but as the utilities observed a much higher rejection rate, one might expect warrant applications to fall off considerably.

It would also help though, if there was more transparency in court proceedings. As far as I can ascertain, the courts are required to give notice of hearings to the applicants – i.e., the utilities – although there does not seem to be any requirement to notify the householders to whom the warrants are to be addressed.

The law requires the householders to be given a minimum of 24 hours notice of an intent to enter, but that doesn’t seem to apply to the court hearings, which seem mostly to be held in private. If householders or their representatives had to be notified and had rights of access to hearings, the utilities would have a much less easy time of it.

Then, as the law stands, there is no automatic provision to appeal the Magistrates’ decisions. The only recourse is to apply for relief by way of an injunction, and then fund expensive High Court litigation to get the warrant set aside.

Thus, there is a lot or work to do, although the system could be tailored into something more workable. And it is with such attention to detail that we will start to see something more equitable – a stratagem which strikes me as being far more productive than emoting over one’s own inadequacies.