British Gas has agreed to pay a record £112 million settlement after the energy regulator, Ofgem, found the company force-fitted prepayment meters on customers who were behind on their bills during the peak of the recent energy price crisis. The settlement, announced on 15 May 2026, includes a £20 million penalty, £70 million in debt write-offs, and compensation payments to thousands of affected households.
The regulator’s inquiry was among its most complex, covering a wide range of cases where British Gas installed prepayment meters against customer consent during a period when wholesale gas prices surged significantly following geopolitical tensions involving Russia. This led to rising energy costs and increased arrears among consumers.
Prepayment meters require users to pay for energy upfront via top-ups, a system that can result in supply being cut off if funds run out. Ofgem’s findings highlighted that forcing prepayment meters on struggling households shifted risk and pressure onto consumers already facing financial difficulty, contrasting with protections expected under regulatory standards designed to safeguard vulnerable customers.
The £112 million package represents the regulator’s formal conclusion that British Gas breached fairness obligations by imposing these meters without adequate consideration of individual circumstances. The settlement’s three key components are: the £20 million financial penalty, £70 million in debt write-offs to reduce customers' outstanding balances, and direct redress payments, which vary according to each customer’s experiences.
Although Ofgem has yet to set out detailed arrangements on how and when the compensation will be paid, the regulator emphasised the importance of the package as a deterrent to practices that exacerbate hardship during crises. The debt write-off element aims to ease ongoing financial pressure for those still managing energy bills under challenging conditions.
Consumer groups have long criticised the practice of moving customers in arrears to prepayment meters because it exposes them to self-disconnection—the risk of losing energy supply by failing to top up—which can have serious consequences, especially in colder months.
Ofgem’s investigation found that British Gas proceeded with these forced installations without sufficiently weighing alternative debt recovery methods or the potential harm to affected households. This approach fell short of the standards expected during periods of acute financial strain on consumers.
The regulator’s action signals that energy suppliers must thoroughly assess a customer’s circumstances before taking enforcement measures like switching to prepayment meters, ensuring protections are in place to avoid undue disconnection risks. The scale and complexity of the investigation indicate a heightened regulatory focus on supplier conduct during the energy price shock, with scrutiny expected to continue across the sector.
For households involved, the settlement offers both financial relief and recognition of the harm caused. However, Ofgem has not yet disclosed specific timelines or the methodology for calculating individual payments and arrears reductions. Customers affected should maintain records of correspondence with British Gas and await further information from the regulator and supplier regarding redress procedures.
This development sets a precedent for how energy suppliers manage debt recovery, particularly during extraordinary market conditions. The substantial penalty and extensive consumer redress underline the regulator’s intent to uphold stringent standards and hold suppliers accountable for fair treatment of financially vulnerable consumers.
While the settlement does not alter how prepayment meters operate, it underscores the risks associated with forced installation on households struggling to pay energy bills. Suppliers are expected to employ alternative repayment options and provide tailored support before seeking enforcement actions that might increase disconnection risks.
In summary, the record £112 million settlement against British Gas marks a significant regulatory intervention addressing forced prepayment meter installations during the recent energy crisis. It emphasises the need for fair treatment, improved debt management, and stronger safeguards to protect vulnerable households from disproportionate hardship in future market challenges.
