Dealing with gas and electricity debt: Part 1 — liability, protection for vulnerable clients, negotiating an arrears repayment and complaints

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16 min readMar 8, 2022

This article was updated on 30 August 2022.

Increases in the energy price cap which influences what most pay for their energy has resulted in huge increases in gas and electricity bills for many thousands of households. Now more than ever, clients will need advice on how to cope with energy debt.

The first of this series of three articles looks at liability for energy debt, protection for vulnerable clients, negotiating an arrears repayment and complaints. The second article looks at what happens when an energy supplier goes out of business. The third covers help available to clients who are struggling to pay and has been updated to include details of the government Cost of Living support.

Law and guidance

Gas and electricity are supplied under a contract or ‘deemed contract’. Contacts will vary from supplier to supplier — however gas and electricity suppliers are governed by a set of Standard Licence Conditions (SLCs) which regulate how they operate. These licences are required by The Gas Act 1986 and The Electricity Act 1989 which prohibit certain activities unless the person carrying on that activity is licensed.

The Office of Gas and Electricity Markets (Ofgem) issues and monitors compliance with licences and has the power to fine suppliers if they fail to comply. In addition each supplier publishes its own codes of practice in relation to its business. These codes are not legally binding but can be useful to refer to in complaints.

Treating customers fairly

Debt advisers will be familiar with the Financial Conduct Authority (FCA) principle which requires firms to treat customers fairly in relation to credit agreements. Standard Licence condition 0 contains similar principles which requires energy suppliers to treat each domestic energy consumer fairly.

‘SLC 0.1 The objective of this condition is for the licensee and any Representative to ensure that each Domestic Customer, including each Domestic Customer in a Vulnerable Situation, is treated Fairly (“the Customer Objective”).’

‘Vulnerable situations’ means the personal circumstances and characteristics of each Domestic Customer create a situation where he or she is:

(a) significantly less able than a typical Domestic Customer to protect or represent his or her interests; and/or

(b) significantly more likely than a typical Domestic Customer to suffer detriment or that detriment is likely to be more substantial.

Suppliers must behave and carry out any actions in a fair, honest, transparent, appropriate and professional manner and provide information which

is complete, accurate and not misleading
is in plain and intelligible language
enables the customer to make informed choices about their supply

Checking liability

You usually have to pay for any gas or electricity you’ve used — even if you haven’t signed a contract with an energy supplier. You have a ‘deemed contract’ if you move in and don’t sign up with a supplier. The rules on ‘deemed contract’ mean that a person who takes a supply of electricity or gas other than by expressly entering into a contract will usually be liable to pay for it. A deemed contract will apply in cases where a supplier fails and the client’s account is moved to another supplier provided by Ofgem.

You don’t have to pay for energy that was used before you moved in or for more than 2 days after you told the supplier you were moving out. Your client won’t be liable directly to the energy supplier if someone else in the household requested the supply and is named on the bill (the person named on the bill may have a claim against your client for their share).

Under SLC 31.h energy bills must show what you have paid and what you owe, a summary of usage and also make it clear whether the bill has been estimated. If the bill has been estimated, get your client to read their meter if they can. Clients who are unable to read their meter can ask to be added to the priority services register and regular readings will be taken for them.

Backbilling rules

Standard licence condition (SLC) 21BA prevents suppliers from backbilling customers for gas and electricity consumed more than 12 months before the date of the bill, where the customer is not at fault. If the client’s supplier has failed to send bills and subsequently tries to charge them for more than 12 months’ energy use, the client should write and explain that they are protected by the back billing rules and should only be charged for 1 year’s usage. Your client can use this template letter to complain about backbilling.

Price increases and switching

Supplies should notify their customers in a reasonable amount of time before a price increase takes effect, (except where the consumer is on a set ‘staggered tariff’ or ‘tracker tariff’ in which case they won’t get any notice). For those who pay by direct debit, the ‘direct debit guarantee’ means that the supplier must inform the consumer about a payment increase before it happens. Read this article by Graham O Malley on Unaffordable direct debits which looks at issues with suppliers increasing direct debits following the rise in the energy price cap. Ofgem has now strengthened standard licence condition 27.15 which covers the information gas and electricity suppliers should use to set monthly direct debit payments. The change means that suppliers to domestic consumers must set direct debits ‘according to the best and most current information available to them’. The new wording applies from 21 October 2022.

According to SLC 31.F.1 suppliers must make sure that consumers are provided with information in a form and at a frequency to enable them to understand that they can switch Tariff and Electricity Supplier, and may benefit from doing so.

Clients can find out about switching Tariff or Supplier on Ofgems website to see if it is cheaper for them to switch. However because many energy companies are struggling at the moment there are very few cheap deals available and most people won’t gain by switching.

We can expect bills to be going up because of the increase in the price of gas and electricity; however, clients should still check their bills to make sure that they have been billed correctly and dispute the bill if not. Have a look at the Citizens Advice public advice page if you think your energy is too high .

Dealing with arrears

Gas and electricity arrears for the property the client is living in are priority debts — suppliers have the power to disconnect supply for non payment. This includes where a client has been moved to a new supplier where their old supplier has gone out of business. However, disconnections are rare.

Ongoing support measures put in place by Ofgem in response to the Covid 19 pandemic mean that disconnections of standard credit meters are currently suspended. If a client is being threatened with disconnection despite this they can contact the Consumer Service for help.

A supplier must comply with standard licence conditions and its code of practice. These require it to consider the customers ability to pay. Suppliers are required to agree repayments of debt at an affordable rate. SLC 27.8 provides that this is regardless of whether payment is under a plan or pre-payment meter. Payment plans will usually be set at a level to allow for the payment of the client’s current consumption plus something towards the arrears. Suppliers must provide customers with a wide choice of payment methods.

The rate of Fuel Direct of £3.70 per week, is a common starting point for arrears repayments however where this is unaffordable, for example where the client’s benefit is being sanctioned, they have multiple debts, or a negative budget and can’t afford their ongoing consumption, suppliers should be asked to accept less. A detailed letter outlining the client’s circumstances and including a financial statement will be important as will reminding the supplier of its obligation to consider affordability.

You can ask for the arrears repayments to be suspended to allow the client to meet payments for their current consumption. Your client may be able to get a grant to clear the arrears. We cover this in detail in our third article Part 3 — Help with energy costs and reducing bills.

If your client has a repayment offer refused, you can refer the supplier to SLC 27.8 and also current advice on Ofgem’s website which says:

“Suppliers must work with you to agree on a payment plan you can afford under Ofgem rules. This includes reviewing a plan you have agreed before. You can ask for:

a review of your payments and debt repayments
payment breaks or reductions
more time to pay”

Vulnerable clients

Most suppliers have policies in place to protect the most vulnerable customers from disconnection. Ofgem requires certain groups to be protected in the winter months (1 October to 31 March):

Those who have reached State Pension age can’t be disconnected in the winter if they:

live alone
or only live with other people who have reached State Pension age or children under 18 years old

For some other households suppliers must offer support before they disconnect in the winter. This applies in households where if someone:

has reached State Pension age
is disabled
has a long-term physical or mental health condition — for example, diabetes or depression

In addition many of the largest suppliers have agreed to Energy UK’s Vulnerability Commitment. This includes:

never knowingly disconnecting a vulnerable customer at any time of year,
only using High Court Enforcement Officers to recover debts where appropriate for a vulnerable customer and
having a strategy and effective arrangements in place for signposting and referring customers to relevant third-party support, including debt advice agencies.

Priority Service Register

Under SLC 26 suppliers must establish and maintain a Priority Services Register (PSR) of domestic customers who may need priority services because they are in a vulnerable situation. The SLC sets out factors that may indicate someone should be on the register, and the priority services that suppliers must offer these customers for free, e.g. communicating with the customer in an accessible format, and taking meter readings if the customer is unable to.

Clients can ask to be put on the register if they:

have reached state pension age
are disabled or have a long-term medical condition
are recovering from an injury
have a hearing or sight condition
have a mental health condition
are pregnant or have children under five
have extra communication needs

Clients might still be able to register for other reasons not on the list. For example, they need short-term support after a stay in hospital. You can argue that a client who is on the priority services register should be treated as vulnerable when you’re negotiating a payment arrangement.

Pre payments meters and arrears

Suppliers must offer a range of ways to pay back a debt. One option could be through a prepayment meter (PPM). Over 60% of prepayment meters have been installed to collect fuel debt (Ofgem — Vulnerable consumers in the energy market 2018).

Clients in arrears may be told that they will be moved to a prepayment meter particularly if they’ve already had one payment plan that’s failed.

The supplier can’t insist on installing a prepayment meter if it isn’t ‘safe and reasonably practical’ (SLC 28.1A) This means clients can refuse to move to prepayment if an illness or disability means they would suffer harm if their gas or electricity was cut off. They can also refuse if they wouldn’t be able to get to or use the meter. Ofgem has issued guidance on what is meant by ‘safe and reasonably practicable’.

If a client with arrears refuses to accept a PPM the supplier can apply to the Magistrates court for a warrant to enter their home and set up the prepayment meter. This action will involve costs and must be proportionate, warrant fees will be added to the debt but cannot be more than £150.

Ofgem’s prepayment meter rules say that suppliers can apply for a warrant to ‘force fit’ a PPM but:

only after they have taken all reasonable steps to agree a payment plan
it should be a last resort to avoid disconnecting supply
it must be safe, practical and easy for the consumer to use and get to

Also suppliers can’t:

force-fit a prepayment meter under warrant for people in very vulnerable situations if they don’t won’t one
charge for warrant costs on debts
use warrants on people who would find the experience very traumatic.

Collecting arrears

The PPM will be set up or ‘calibrated’ to take extra to clear the arrears. Suppliers are required under SLC 27.8 to accept repayments at an affordable rate whether under a prepayment or regular meter.

Where this is already in place, find out how much is being collected. Ask the supplier to reduce arrears payments to an affordable level. Ask the supplier to pause arrears payments if the client is struggling to meet their current consumption. Your client may be able to get a grant to clear the arrears. We cover this in detail in our third article Part 3 — Help with energy costs and reducing bills.

If your client has inherited a prepayment meter from the previous occupier make sure that it is not set to collect debt owed by the previous occupiers.

Getting a PPM moved or changed to a standard meter

If your client has a mental or physical health condition which makes it difficult for them to manage their prepayment meter and they regularly self disconnect you can ask the supplier to either move the meter or replace it for a standard meter. There is a general provision in SLC 28, which states that if a supplier becomes aware or has reason to believe a PPM is not safe and or reasonably practicable to use, they must make alternative arrangements. This could mean changing to a standard meter or moving the meter. The supplier may charge for moving the meter but this will be free for those on the PSR.

Ofgem’s prepayment meter rules provide that: ‘If your meter can’t be moved it must be replaced with a smart meter or traditional meter which lets you pay after you have used energy. This applies if you have a disability or illness that make it:

bad for your health if your energy could get cut off
hard for you to top up, understand or use the meter.’

Energy UK — the industry trade body also has a set of principles relating to the use of prepayment meters for customers in arrears. “If PPM installation is not safe and reasonably practicable, the supplier will offer alternative payment methods”.

“Each Energy UK Member has committed to:

Take into account changes in the circumstances of households who pay by PPM. If the supplier decides that it is no longer safe and reasonably practicable for the household to have a PPM, then the supplier will exchange the meter free of charge and/or change the mode.
Change the mode and/or remove the PPM free of charge where a customer moves into a property with a pre-existing PPM and it is not safe and reasonably practicable.”

Membership of Energy UK is voluntary; you can check if a supplier is a member. Even if a supplier is not an Energy UK member they may choose to not charge for certain meter activities. This is likely to be information available on a supplier’s website.

Support for meter top ups

Clients need to contact their supplier immediately if they don’t have money to top up their meter. Suppliers will be able to offer support including:

Emergency credit — usually £5 on each meter . This emergency credit needs to be paid back and is taken automatically the next time the client tops up. In some situations for example where a client has just come out of hospital you may be able to persuade the supplier to reset the meter (make sure that there won’t be an extra charge for this).
Friendly credit — is designed to protect clients if they start running out of credit when the shops are closed. Times can vary slightly by supplier and season, but generally, consumers won’t be cut off between about 6pm and 9am Monday to Saturday, all day Sunday, and on bank holidays. The ‘friendly credit’ will need to be paid back the next time they top up.
Additional support credit — is available to some people who can’t afford to top up and face self-disconnection (SLC 27A.5). Contact the client’s supplier to find out what they can offer. This must also be repaid but repayments must be set at an affordable rate (SLC27.8).

Fuel Direct

Clients on certain benefits may be able to make payments directly from benefit payments under Fuel Direct (also known as ‘third party deductions’). The scheme allows for a fixed amount to be deducted directly from benefit payments each week to meet current consumption plus an amount to go towards paying off debt.

Clients must have a fuel debt and be on either:

Universal Credit (UC)
Income support (IS)
income based Job seekers allowance
Income based Employment and Support Allowance
Pension credit (PC)

For clients on UC, a fixed rate of 5% of entitlement can be deducted. For other benefits £3.70 per week will be deducted each week to pay off the debt, plus an additional amount to cover ongoing usage. Clients who want to pay by Fuel Direct will need to ask their supplier to request this from the DWP. Both the energy supplier and the DWP have to agree. The DWP must consider whether it is in the client’s best interests or the best interests of their family.

The supplier will estimate the rate of weekly consumption usually based on consumption over the last year. If the amount suggested seems high you can ask for an explanation and check that the supplier is not relying on estimated figures. Under Sch 9 para 8 SS (Claims and Payments) Regulations 1987 the maximum amount that can be taken without the client’s consent is 25% of IS, JSA, ESA applicable amount or PC minimum guarantee or UC standard allowance.

As provided by Sch 6 para 8(2) UC, PIP, JSA & ESA (Claims and Payments) 2013 Regulations deductions from UC for current consumption cannot continue once the debt is cleared but will continue for legacy benefits. Fuel direct will usually be refused if there is already a prepayment meter in place which has been set up to collect arrears.

Disconnection rules outside of the Covid protections

If a bill for ‘charges due’ is unpaid after 28 days the supplier may threaten to disconnect a gas or electricity supply. Disconnection can only take place at the premises to which the bill relates and not for arrears on a previous property but can include arrears owed to a previous supplier where that supplier has gone out of business. It’s rare to be disconnected as suppliers will usually offer to install a prepayment meter instead.

In some situations your supplier must offer you support before they disconnect. This applies between 1 October and 31 March each year if someone in the household:

has reached State Pension age
is disabled
has a long-term physical or mental health condition — for example, diabetes or depression

The largest suppliers (British Gas, EDF Energy, E.on, Scottish Power and SSE) also have a voluntary agreement not to disconnected at any time of year those who:

Are disabled
Have a long-term health problem
Have severe financial problems
Have young children under 6 living at home

If the client does not come to an agreement with the supplier to pay off the debt, the supplier should visit the client’s home to check on their situation before they take any action to disconnect. If they decide to go ahead to disconnect the supply they must give 7 days notice. They can then apply to the Magistrates court for a warrant to enter the property to disconnect the supply (Rights of entry Gas and Electricity Boards Act 1954). The costs of the application will be added to the bill.

Disconnection can only be for ‘charges due’ so this cannot be based on an estimate and only includes amounts for the supply of the energy, standing charges and provision of a meter. It does not include any outstanding amount for credit sale agreements or repositioning/installing a meter for a disabled person. There is no right to disconnect if the entire bill is in dispute.

The supplier won’t need a warrant to disconnect a meter if it’s located on the outside of the client’s property (as the warrant is to enter the property), but most suppliers will still get one. If the court grants a warrant, the supplier will be able to disconnect the supply after giving a further 7 days notice in writing.

The client can make arrangements to pay at any stage in this process, including at the magistrates court, in order to stop the disconnection. The supplier ought to consider reasonable offers and affordability even at this late stage but is likely to require either a security deposit or to fit a prepayment meter.

If the client has a ‘smart meter’ the supplier could potentially disconnect the supply remotely without needing to access the meter. However, before they do this, they must have:

contacted the client to discuss options for repaying the debt
visited the property to assess the client’s personal situation and whether this would affect them being disconnected, eg if they are disabled or elderly

Reconnection

If your client’s supply has already been disconnected, contact their supplier to arrange reconnection. The client will need to arrange to pay the debt, the reconnection fee and administrative costs. The amount charged depends on the supplier, but it must be reasonable.

The supplier may require a security deposit as a condition of reconnecting a supply but not if a prepayment meter is installed. Once all the charges are paid the supplier must reconnect the supply within 24 hours. If the client can’t pay all the charges at once the supplier may be willing to agree to a repayment plan. If they do agree then they should reconnect within 24 hours.

If you need help contact the Citizens Advice consumer helpline. They may be able to refer your client to the Extra Help Unit who can negotiate with the supplier on their behalf.

Complaints

If your client is not happy with the way that they’ve been treated by their energy provider they can make a complaint using the supplier’s complaints procedure. If they’re not happy with the outcome of the complaint they can escalate this to the Energy Ombudsman.

The Ombudsman Services: Energy can deal with complaints against gas and electricity suppliers and the energy network companies.

The energy Ombudsman can’t deal with complaints about:

decisions made by an energy company about the prices it charges
cases considered to be malicious or unjustified
liquid petroleum gas (LPG)

The complaint must be made within 12 months of the date of the final letter from the supplier saying that they cannot do anything for the client (the ‘deadlock’ letter). If the supplier has not sent such a letter, the client can make a complaint to the Energy Ombudsman at any time within nine months of the date on which they first complained to the supplier. The Energy Ombudsman can ask a supplier to make a financial award of up to £10,000 (plus VAT) to a client, as well as making an apology or taking other action to help the client. However the most common award that they make is £50.

For further reading on dealing with energy debt have a look at the other two articles in this series:

Written by Lorraine Charlton, with thanks to Lynette Williams. Lorraine is a debt expert in Citizens Advice Expert Advice Team. Lynette is a consumer expert in Citizens Advice Expert Advice Team.

This article was updated on 30 August 2022, the information is correct as of that date.

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