UK energy suppliers pay millions over compensation failures and overcharging

Three energy suppliers have paid £8 million over compensation failures after delays in producing final bills when customers switch, regulator Ofgem has said, with another two paying out for overcharging customers.E.On Next, Octopus Energy and Good Energy have been forced to issue refunds and compensation for delaying or failing to make statutory compensation payments owed to energy customers.

The energy watchdog said on Wednesday more than 100,000 households were affected after the three suppliers either missed or delayed compensation payouts that were due when they did not provide a final bill within six weeks, as required when a customer switches to another provider.

Meanwhile, Ofgem announced on Thursday that Good Energy and Ovo Energy will also pay £4 million in compensation after overcharging customers during the energy crisis.

Errors by the two suppliers meant some people were charged above the maximum rates allowed under either the energy price cap or the government’s Energy Price Guarantee scheme.

Some 18,000 households did not receive protection they were due, Ofgem said.

Speaking on ITV's Good Morning Britain on Wednesday, Martin Lewis clarified it is "compensation, not a fine".

Ofgem established the three suppliers either missed or unduly delayed GSOP (Guaranteed Standards of Performance) compensation payments worth over £6.3million.

Some customers waited more than a year to receive compensation, the regulator said.

The amounts owed to customers that Ofgem forced the energy suppliers to pay:

• E.On Next, paid a total of £5.5 million to almost 95,000 customers;  

• Octopus Energy paid approximately £750,000 to 19,000 customers; 

• Almost 350 Good Energy customers received a combined total of £18,000;

• More than 6,900 customers were overcharged by Good Energy, while Ovo overcharged nearly 11,000 customers - affected households will receive a combined total of £2.7 million.

Suppliers paid an additional compensation of £1.7 million to customers or the Energy Industry Voluntary Redress Scheme (EIVRS), which supports vulnerable consumers - E.On Next paid £1.3 million.

Good Energy will pay an extra £1.25 million to vulnerable customers in the UK under Ofgem’s voluntary redress fund.

All three suppliers have now updated their billing processes and systems to ensure payments will now be made in line with the regulations. 

Affected customers do not have to do anything to claim their refund; the payments have now been made by the suppliers involved.   

In May 2020, Ofgem brought in additional 'Guaranteed Standards of Performance' (GSOP) to reduce delays in final billing.

This is the first time the regulator has taken compliance action on GSOP compensation delays in relation to final billing performance standards. 

The rules ensure suppliers provide compensation to customers when switches are delayed, customers are erroneously switched, or final bills are produced too late.

Neil Kenward, Director for Strategy at Ofgem, said: "Our rules mean that where energy companies drag their heels, customers are automatically compensated. We won’t hesitate to hold energy companies to account, as we have done today.  

The regulator added, as the energy market starts to recover, we’ll likely see a return to more switching, and this action is a reminder to suppliers that they need to make switching as easy and convenient as possible for their customers, and where they cause undue delay, pay compensation swiftly.

How do the new rules help me? 

Under the rules, customers are entitled to an automatic £30 payment if a final bill is not produced in six weeks.

A further is £30 due if the compensation is not provided within another 10 working days.

Previously, no compensation was due for such delays.Since May 1, 2020, customers have already received over £700,000 from suppliers.

Of these payments, 27% have been for mistaken switches, while 73% have been for late credit balance refunds.

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