OVO Energy Limited to pay £2,000,000 for Energy Price Guarantee overcharging
Decision
OVO Energy Limited has refunded and compensated 10,987 customer accounts it has overcharged due to not applying the Energy Price Guarantee discount. The total amount of customer detriment to be refunded is £1,492,917. Refunds will be issued via a rebilling exercise that will be issued automatically to affected customers.
In addition, the supplier has paid £498,838 in goodwill payments to affected customers, and a further £10,000 into Ofgem’s voluntary consumer redress fund for reporting failings, equating to a total package of £2,001,755.
In November 2022, OVO Energy Limited self-reported to Ofgem that it had identified a number of customers that may have had incorrect rates applied to tariffs. In December 2022, OVO Energy Limited confirmed that operational errors with the implementation of the Energy Price Guarantee discount to its tariffs were present and would work with Ofgem to identify all customers impacted and implement fixes. In March 2023, OVO Energy Limited confirmed it had overcharged 10,987 customers for varying periods of time between October 2022 and March 2023. The result of this issue was that almost 11,000 customers paid above the maximum rates allowed under the Energy Price Guarantee. The average amount being refunded to affected customers is £135. OVO Energy Limited also provided goodwill payments, with the amount of goodwill varying, depending on the size of overcharge. Affected customers on the Priority Services Register (PSR), who are more likely to be in vulnerable circumstances, will also receive a greater share of goodwill.
Suppliers must be vigilant and ensure that all eligible customers, particularly those who may be in vulnerable circumstances, are protected by the Energy Price Guarantee. Where issues are identified, we expect suppliers to act quickly to provide a resolution and to engage Ofgem on the steps they are taking to put things right. In determining this redress package, we have considered the additional financial hardship that this issue may have placed on customers, especially as the Energy Price Guarantee is designed to help customers manage energy prices at high levels.
When introducing the Energy Price Guarantee, Ofgem provided suppliers with a regulatory easement letter stating that it would take a pragmatic and proportionate approach to compliance taking into account the speed at which the scheme was introduced to limit consumer bills. Whilst this issue represents a serious matter, considering OVO Energy Limited promptly reported the issue, and moved quickly to put in place steps to resolve the issues, Ofgem has decided not to take formal enforcement action or require a substantive contribution to the voluntary redress fund on this occasion. Ofgem’s priority was to ensure affected customers were rectified and offered sufficient goodwill. Had OVO Energy Limited not quickly engaged on the issue and resolved in a timely manner – the redress package sought would have been considerably higher.
The £10,000 payment into Ofgem’s voluntary consumer redress fund reflects errors provided to Ofgem in response to a mandatory RFI. We remind all suppliers we take seriously the obligations in place to provide requested data accurately, and in a timely manner. This is necessary to ensure we have the information we need to conduct our regulatory functions.
Ofgem closely monitors all suppliers’ implementation of the Energy Price Guarantee, this redress package reflects the pragmatic approach we promised due to the speed of implementation but now the scheme is established we will continue to hold suppliers to account if they do not meet their obligations.
Notes to editors:
- 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. Information on the Energy Saving Trust can be found here: Funded Energy Redress Projects.