British Gas Settles Prepayment Meter Probe for £20 Million

British Gas has agreed to a £20 million settlement package following a regulatory investigation into the forced installation of prepayment meters, reporting from investing.com confirmed on 15 May 2026. The agreement with the UK's energy regulator, Ofgem, addresses findings that the company, a subsidiary of Centrica plc, had employed agents who wrongfully forced entry into the homes of vulnerable customers. This settlement aims to compensate affected individuals and contribute to a broader industry redress fund, closing a significant chapter of regulatory scrutiny.

Why Was British Gas Investigated?

The investigation by Ofgem, the UK's independent energy regulator, was launched following revelations of systemic failures in how British Gas managed customers in debt. The probe focused on the utility's use of third-party contractors to install prepayment meters (PPMs) under warrant, a practice that led to agents breaking into homes of vulnerable people, including those with severe medical conditions. The regulator found that British Gas did not have adequate procedures to protect these customers.

Evidence showed a failure to conduct proper assessments of customer vulnerability before resorting to forced installations. This breached Ofgem's licensing conditions, which mandate that suppliers must take all reasonable steps to avoid such actions, especially for at-risk households. The investigation covered a period where thousands of warrants were executed, bringing the company's internal controls and oversight of its contractors under intense examination. The resulting scandal triggered a temporary industry-wide ban on forced PPM installations in early 2023.

How Is the £20 Million Settlement Structured?

The £20 million package is not a simple fine but is structured to provide direct and indirect remedies. A significant portion of the funds is allocated for direct compensation payments to customers who were subjected to wrongful forced installations. Each affected household is expected to receive a payment, with the specific amount depending on the circumstances of their case. The average compensation from similar past settlements has been around £200 per customer.

Another part of the settlement will be paid into Ofgem's voluntary redress fund. This fund supports energy consumers in vulnerable situations across the UK, often by financing charities that provide energy efficiency advice and support. This dual structure ensures that funds address both the specific harm caused by British Gas and broader consumer welfare issues within the UK energy market. This approach has become a standard component of Ofgem enforcement actions.

What Is the Financial Impact on Centrica?

For Centrica (CNA.L), the parent company of British Gas, the £20 million settlement represents a manageable financial cost but carries significant reputational weight. In the context of Centrica's financial scale, the amount is minor; the company reported an adjusted operating profit of £2.7 billion for the full year 2025. As such, the direct financial impact on the company's balance sheet is negligible and was likely provisioned for in previous quarters.

The market reaction to the settlement is expected to be muted, as investors had largely priced in a financial penalty following the high-profile nature of the scandal. The primary concern for shareholders is not the one-time cost but the potential for lasting brand damage and increased regulatory risk. The settlement allows management to move forward, but the company's stock performance will remain tied to its ability to demonstrate improved customer service and governance standards to both regulators and the public.

Does This End the Matter for British Gas?

While the Ofgem settlement resolves the formal regulatory action, it does not entirely close the book on the prepayment meter issue for British Gas. A key acknowledged risk is the potential for private civil litigation from affected customers who may seek further damages beyond the compensation offered in the settlement. Class-action lawsuits, though less common in the UK than in the US, remain a possibility and could create further financial and legal headwinds.

the company faces the long-term challenge of rebuilding consumer trust. The scandal damaged its reputation as a leading energy supplier, a critical asset in a competitive market with over 20 million customers. British Gas must now operate under a microscope, with Ofgem signalling stricter enforcement across the entire energy sector. Any future missteps are likely to be met with more severe penalties, reflecting the regulator's tougher stance on protecting vulnerable consumers.

Q: What is a prepayment meter?

A: A prepayment meter, or PPM, is a type of utility meter that requires users to pay for energy before they use it. Customers top up a key or card with credit, similar to a pay-as-you-go mobile phone. While they can help with budgeting, they can also lead to self-disconnection if a customer cannot afford to top up, leaving them without heat or power. Approximately 4 million UK households use PPMs.

Q: Who is Ofgem?

A: Ofgem, the Office of Gas and Electricity Markets, is the independent energy regulator for Great Britain. Its primary role is to protect the interests of existing and future energy consumers. It does this by promoting competition, regulating network monopolies, and ensuring suppliers meet their license obligations, including rules around customer service and the treatment of vulnerable individuals. It has the power to impose substantial fines, with penalties in recent years exceeding £50 million for various infractions.

Q: Are forced prepayment meter installations still banned?

A: Following the initial scandal in early 2023, Ofgem and the UK government implemented a temporary moratorium on all forced PPM installations. This ban was later replaced by a new, much stricter code of practice that suppliers must follow. While technically no longer banned, installations under warrant are now subject to a far higher threshold of checks, making them extremely rare and effectively a last resort for only the most severe cases of non-payment where the customer is not deemed vulnerable.

Bottom Line

The £20 million settlement closes the regulatory case against British Gas but leaves the firm with the significant task of rebuilding consumer trust.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.