E.ON Next pay a total of £14.5m to former prepayment meter customers due to a failure to issue final bills
Decision
- Publication date
- Company
- E.ON Next
- Industry sector
- Supply and Retail Market
- Licence type
- Gas Supplier Licence
- Electricity Supply Licence
Between February 2021 and September 2023, E.ON Next failed to send final bills to prepayment meter customers within 6 weeks of the supplier transfer or termination of the Domestic Supply Contract (i.e. after they left the supply of E.ON Next), as required by Standard Licence Condition (SLC) 27.17 of the gas and electricity supply licences.
Prepayment meter customers are often vulnerable customers. As vulnerable customers may be less able to protect themselves or represent their interests within the supply contract relationship, it is particularly important that suppliers comply with these regulations.
As a consequence of final bills not being issued, a number of customers did not receive notification of credit balances left on their accounts, nor associated refunds of their credit balances and/or compensation payments relating to E.ON Next’s failure to comply with the Guaranteed Standards of Performance (GSOP) Regulations.
E.ON Next initially reported the issue to Ofgem and were cooperative throughout the engagement, ensuring they returned credit balances to customers, together with GSOP compensation payments and an additional level of redress to recognise the impact of failing to issue credit balances and GSOP payments on time. Full details of which are set out below:
Across the period of non-compliance, almost 100,000 E.ON Next customer accounts1 were found to have been in credit (an average of £51 per account) out of a total volume of over 248,000 customer accounts. The average total sum paid to customers was £144 per account. As part of the exercise to create final bills, E.ON Next also voluntarily wrote off the debt of those customers who left supply during the period of non-compliance.
Where it has not been possible to trace a customer, E.ON Next has agreed to make payments to the Energy Industry Voluntary Redress Fund. The fund is administered by the Energy Saving Trust, which has been appointed by Ofgem to distribute payments from the fund to help support energy consumers in vulnerable situations.
E.ON Next has updated its billing processes and systems to resolve the issue and ensure final bills are now being sent in accordance with SLC 27.17.
Ofgem is continuing to progress cases against other suppliers on the same issue.
Key messages to suppliers
It is important that suppliers understand their obligations under:
- Standard Licence Condition 27.17, the requirement to take all reasonable steps to send a final Bill or statement of account of the Domestic Customer’s account within 6 weeks of the supplier transfer or termination of the Domestic Supply Contract.
- Guaranteed Standards of Performance (GSOP) regulation 6CA (2020) and regulation 8 (2015), the requirement to make a standard (compensation) payment of £30 within 10 working days of the supplier’s failure to issue a customer a final bill within 6 weeks of the supplier no longer having responsibility for the supply of electricity or gas. If the supplier fails to make a standard payment on time it must make an additional standard payment of £30 within a further 10 working days.
- Standard Licence Condition 5A, the requirement to be open and cooperative with Ofgem. The licensee must disclose any actions or omissions that give rise to a likelihood of detriment to Domestic Customers.
Ofgem expects suppliers to have robust governance and risk management processes in place with the ability to identify and mitigate the risk of consumer detriment. Suppliers must ensure their systems, processes and practices are compliant with all regulatory requirements.
In mitigation to the seriousness of this case, Ofgem would like to recognise that E.ON Next self-reported the non-compliance, as is required under SLC 5A.1. This enabled investigations to be opened with suppliers in a similar position and customer detriment across the industry to be limited. The commendable extent of their engagement through the compliance process and their past performance and behaviours has also been taken into account when deciding upon the level of redress.
Ofgem has used a compliance approach in these cases and considers that this alternative action will act as a deterrent to future non-compliance. Where any further non-compliance is identified, Ofgem will strongly consider taking formal action in accordance with our Enforcement Guidelines.
1‘Customer accounts’ refers to either gas or electric accounts, hence one customer may have had two accounts.