Investigation into E.ON’s compliance with its obligations under the gas and electricity supply licences (Standard Licence Conditions 23.6 and 24.3)

Opened:
Jun 2014
Decision Proposed:
Apr 2015
Closed:
May 2015
Company:
E.ON
Regulation Area:
Sectoral Regulations
Breach Area:
Tariff/payment rules

The Authority has confirmed its decision to impose a financial penalty on E.ON following an investigation by Ofgem into E.ON’s compliance with requirements of conditions 23.6 and 24.3 of its gas and electricity supply licences in relation to E.ON’s January 2013 and 2014 price rises.

Under Ofgem obligations, suppliers had to give customers 30 days’ notice of a price rise; this allowed customers the chance to switch before the increase took effect and without incurring exit fees. When considering the breach in relation to the January 2013 price rise, Ofgem considered SLC 23.6, consolidated to 01 December 2012. This set out that when a supplier was notified that a customer wished to terminate their contract, because of the price rise, they were not permitted to apply the higher charges to that customer if they subsequently received notice confirming that another supplier would be taking over supply.

When considering the breach in relation to the January 2014 price rise, Ofgem considered SLC 23.6, consolidated to 31 December 2013. This set out that when a supplier received notice confirming that another supplier would begin to supply the customer within a reasonable period, because of the price rise, the supplier must not apply the higher charges to that customer. The difference being that the customer did not have to contact the supplier.

Condition 24.3 (as was in force at the relevant times) set out that, in such cases as above, the supplier must not charge a termination fee.

The investigation into the breaches relating to the January 2013 price rises was opened in June 2014. The investigation was extended in July 2014 to include the price increase in January 2014 following further relevant information that came to light.

E.ON has admitted that it breached the SLCs listed above and the Authority also found that E.ON breached the SLCs listed above.

The Authority has confirmed its decision to impose a financial penalty of £1. This is in addition to £7.75 million (less £1) in redress that E.ON has paid to Citizens Advice Energy Best Deal Extra. This redress will be used to provide one-to-one energy advice to vulnerable consumers across Scotland, England and Wales.