Energy companies overcharging household customers

home heating systemThe energy regulator Ofgem has forced the UK’s largest independent energy supplier, Ovo Energy, to pay £8.9 million to a voluntary redress scheme to help vulnerable domestic costumers. In addition, the amounts owed by household customers who had been overcharged at the wrong rates have been written off.

The settlement means Ovo will avoid being fined after sending inaccurate statements to over 500,000 customers while others had received no bill at all. Failures were found between July 2015 and February 2018, and continued even after they were discovered by Ovo Energy, which concentrated on expanding its business at the expense of current household customers. Ovo told Ofgem that at the time it “did not believe it was an efficient use of resources to process 120,000 small value refunds”. Although the failings had been discovered, Ovo did not report itself to Ofgem.

17,500 prepayment meter customers were charged incorrectly and 8,000 more customers paid over the regional level of the prepayment meter when they were not moved to new tariffs when their deals finished.

In 2017, Ovo underestimated energy consumption over the winter period and either undercharged or overcharged many of its customers, including one homeowner who paid over £4,500 for their household energy bills.

Ovo also misled 160,000 of its household customers when they were given inaccurate pricing information. This may have caused people to either remain with or switch from Ovo when making pricing decisions.

Another energy supplier, Utility Warehouse, was found to have overcharged many of its household customers due to a ‘systems error’ concerning the Warm Home Discount, causing customers to pay over the default cap over 11 months last year. In this instance the company did self-report, saying that it had overcharged household customers by £150,000. It will now pay out £650,000 as a result – £450,000 to the nearly 3,500 overcharged households including an additional £300,000 ‘goodwill gesture’ and a fine of £200,000 that will be invested in a redress scheme for vulnerable customers.

Read more about Ofgem here.

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