Energy customers who have been overcharged are to receive a combined total of £2.7 million from two suppliers – Good Energy Ltd and OVO Energy Ltd.
Consumers in a vulnerable situation across the UK will also benefit from an additional £1.25 million payment to Ofgem’s voluntary redress fund in recognition of the suppliers’ failure to apply the price protections put in place at the height of the energy crisis.
As part of its compliance work, Ofgem found that approximately 18,000 customers did not receive the protection they were due, as errors by the two suppliers saw them charged above the maximum rates allowed under either the energy price cap or the Energy Price Guarantee Government scheme, which was put in place to protect consumers.
The failings were:
- Good Energy overcharged almost 6,966 customers a total of £391,650 with reference to the price cap and Energy Price Guarantee between January 2019 and October 2022. This was due to operational failures to adjust tariffs after customers changed their payment method.
- Between October 2022 and March 2023, a total of 10,987 OVO Energy customers were overcharged £1,492,917 above the Government’s Energy Price Guarantee, brought in last winter to protect consumers as households struggled to cope with rising energy prices.
Those customers affected will now be automatically refunded and receive compensation. The average amount paid to Good Energy customers will be £109 while OVO customers will receive an average of £181. Customers affected do not need to do anything; they will be automatically refunded.
- Good Energy will pay £1.25 million to Ofgem’s voluntary redress fund for the inadequate systems, processes and repeated inaccurate reporting of information to the regulator over an extended period.
- OVO will also pay £10,000 to the redress fund for reporting issues. The redress package sought would have been considerably higher had OVO not quickly engaged Ofgem and resolved the issue in a timely manner. This is in line with the expectations set out by Ofgem in a letter to all suppliers in September 2022.
The redress fund provides support to energy consumers in vulnerable circumstances.
Dan Norton, Deputy Director of Retail, Ofgem said: “Protecting consumers is always our top priority, and we expect suppliers to ensure customers pay no more than the level of the price cap or Energy Price Guarantee – schemes put in place with the very purpose of helping people.
It is totally unacceptable that Good Energy and OVO Energy customers were overcharged, particularly at a time that is already so challenging and stressful for consumers across the UK.
Energy suppliers should hear this loud and clear: we expect suppliers to act with the utmost care and integrity. we will continue to hold them to account if they do not meet their customer protection or reporting obligations.”
Today’s action reminds suppliers it is essential they provide Ofgem with timely, complete and accurate data so that the regulator can quickly identify potentially non-compliant activity that risks consumer harm. In both cases, the redress packages sought would have been considerably higher if the suppliers had not self-reported the issues.
Suppliers must be vigilant and ensure that all eligible customers, particularly those who may be in vulnerable circumstances, are protected by the price cap and Energy Price Guarantee. Where issues are identified, Ofgem expects suppliers to act quickly to resolve any overcharge and to engage with the regulator on the steps they are taking to put things right. This is just one of many compliance and enforcement cases undertaken by Ofgem.
Good Energy has now submitted a formal improvement plan, as required by Ofgem, to ensure appropriate governance and processes are put in place to prevent similar overcharge and data reporting issues from reoccurring.
Notes to Editors
In September 2022 Ofgem wrote to suppliers setting out expectations for the application of the Energy Price Guarantee. Given the urgency to get the scheme in place, Ofgem assured suppliers that it would work with them in addressing issues as they arise and would take a proportionate and pragmatic approach to dealing with any arising compliance issues. This influenced the sum payable by OVO Energy Ltd to the redress fund, given the supplier’s quick engagement with Ofgem to resolve the issue.
In addition to customers covered by the price cap and Energy Price Guarantee, this overcharge issue also affected a number of Good Energy customers on tariffs not covered by the price cap, as they are on a renewable Standard Variable Tariff that has an enduring derogation from complying with the price cap. This overcharge relates to affected customers paying in excess of their contractual rates.
Ofgem’s Redress Fund is operated on its behalf by the Energy Saving Trust and allows companies to pay a sum of money to appropriate charities, trusts, organisations or consumers as a result of breaches of licence conditions.