Thousands of British Gas customers who had prepayment meters force-fitted in their homes will receive up to £112m in compensation and debt write-offs on their energy bills.

Great Britain’s energy regulator found that British Gas forced prepayment meters on homes that were not keeping up with their bills at the height of the Russian gas crisis, in one of the most complex Ofgem investigations in its history.

Over three years after the scandal emerged, British Gas must pay a £20m penalty into Ofgem’s voluntary redress fund to compensate customers who suffered unfair treatment and write off debt worth up to £70m.

The supplier will also continue to provide the remainder of a £22.4m voluntary support package that it launched in the wake of the scandal, which is aimed at supporting customers on prepayment meters (PPMs).

Tim Jarvis, Ofgem’s chief executive, said: “It is clear that British Gas fell short in its treatment of an unacceptable number of vulnerable customers who had a PPM installed without consent, and it’s right that they’ve taken action to put things right. Because of our action customers will receive a substantial package of redress, compensation and debt write-off.”

Ofgem temporarily banned the practice of forcing prepayment meters on households that missed repeated payments on their bills after the Times reported in early 2023 that debt agents working for British Gas had ignored signs of vulnerability to fit the meters.

The regulator later found that most of Great Britain’s major energy suppliers had forced prepay meters into the homes of customers as the energy cost crisis in 2022 caused many to miss payments on their bills.

The investigation into British Gas concluded about one year after a separate investigation found that ScottishPower, EDF, E.ON, Octopus Energy, Utility Warehouse, Good Energy, TruEnergy and Ecotricity had fallen short of the regulator’s standards when fitting prepayment meters to reclaim unpaid energy debts.

The suppliers collectively agreed last May to pay 40,000 households more than £18.6m in compensation and debt write-offs on their energy bills.

“The installation of prepayment meters under warrant should only be a last resort, with rigorous checks to ensure debt is recovered lawfully, proportionately and safely,” Jarvis said.

“This investigation forms part of Ofgem’s wider work to raise standards across the energy market and strengthen consumer protections. We continue to challenge suppliers to do more to identify and support customers in difficulty and proactively offer support, and our priority remains driving lasting improvements so customers can have confidence they will be treated fairly.”

Chris O’Shea, the chief executive of Centrica, which owns British Gas, said: “What happened should never have happened, and I am sorry to the prepayment customers who were affected.

“Over the last three years, we have treated this matter with the seriousness it deserves and have made changes to our practices and put safeguards in place to ensure we deliver the standards our customers have every right to expect.”

The regulator allowed suppliers to restart forced meter installations less than a year after its moratorium, although forced fittings in homes with young children or residents over the age of 75 remain banned.