Energy firms ordered to pay back over £9 million after overcharging customers

Two energy firms have been ordered to pay over £9 million for sending inaccurate bills to half a million customers and overcharging people.
Ovo is to pay 8.9m into a redress fund.Ovo is to pay 8.9m into a redress fund.
Ovo is to pay 8.9m into a redress fund.

Ovo Energy & Utility Warehouse have been warned by regulator Ofgem for issuing inaccurate or incomplete information to customers, and for under and overcharging customers due to IT issues. Ovo - which was recently given the go-ahead to its acquisition of Perth-based SSE - was ordered by Ofgem to pay back £8.9m into a redress fund, while Utility Warehouse has been ordered to pay back £650,000 to customers for overcharging on bills.

More than 500,000 Ovo customers received inaccurate bills between July 2015 and February 2018. Meanwhile, Utility Warehouse was fined for overcharging people who already find it hard to pay their energy bill, as they receive the Warm Home Discount.

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Ofgem said that Ovo had underestimated consumption over one winter, meaning customers were under or overcharged, while around 10,000 customers were not given statements of renewal terms when tariffs were ending or were not moved to new tariffs when their existing tariff ended;

A total of 17,500 prepayment meter customers were not initially charged at the correct regional level of the prepayment meter cap, while a further 8,000 customers ended up paying above the level of the prepayment meter cap due to Ovo not moving them to new tariffs when their existing tariff ended.

Citizens Advice Scotland energy spokesman Dr Jamie Stewart said: “Customers who give their patronage to an energy company are entitled to fair treatment and that includes accurate billing. With Ovo taking on SSEs retail business they will have a significant market share in Scotland.

“The regulator is quite right to require Ovo to make this payment and it is good that the money will go directly to vulnerable customers. However it is concerning that Ovo did not report these issues themselves. This shows the value in having a strong regulator."

Rik Smith, energy expert, said: “Today we have two energy companies being fined by Ofgem for messing up their customers’ bills. Ovo Energy have long enjoyed a good reputation and loyal support from their customers which has led to them being awarded by the industry. But Ofgem has found that once Ovo became aware of mistakes, they didn’t let the regulator know or prioritise resolving the issues.

“Customers must come first. Ovo has to get these things right - they’re a big, well established company about to become even bigger when they take on another 3.5 million customers from SSE. The news that they’ve been fined nearly £9 million for making a mess of things will come as a shock to many people."

“Meanwhile Utility Warehouse has been fined for overcharging people who already find it hard to pay their energy bill, as they receive the Warm Home Discount. For some it is a life saver and a system error such as this would have been extremely concerning for these vulnerable customers."]

Ofgem said Ovo Energy now accepts and has corrected the breaches, including refunding its customers affected by overcharging on the prepayment meter cap. It has also written off all amounts owing from customers who had been charged at the wrong rates.

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It has agreed to pay £8.9m into a voluntary redress fund to help vulnerable customers. Meanwhile, Utility Warehouse has agreed to refund £450,000 to 3,430 customers who paid too much - an average of £131.20 each. It was also made to pay £200,000 into the redress fund for vulnerable customers.

Anthony Pygram, director of conduct and enforcement at Ofgem, said: “Ovo Energy billed a number of its customers incorrectly and issued them with inaccurate information. The supplier did not prioritise putting these issues right whilst its business was expanding.

“Our enforcement action sends a strong message that suppliers must get basic services right for all their customers. Ovo Energy has accepted the breaches and put processes in place to comply with the rules in future.”