Ten UK energy firms to pay £7m in compensation after overcharging error
Ten UK energy suppliers including EDF, E.ON and Octopus are to pay £7m in compensation and refunds after overcharging customers, after a review by the energy regulator for Great Britain.
Ofgem said the suppliers had agreed to pay more than 34,000 customers compensation and refunds because of erroneously billing them more for standing charges than is allowed under the regulator's price cap. Standing charges are daily fees added regardless of how much energy is used.
The affected customers all had restricted meter infrastructure, meaning more than one electricity meter point recording usage at their property, and were erroneously overcharged between January 2019 and September 2024.
While energy suppliers are allowed to apply multiple standing charges for homes with multiple electricity meters, companies are not allowed to break Ofgem's price cap, which limits the maximum amount that can be charged in each unit of electricity or gas used.
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Charlotte Friel, the director of retail and pricing systems at Ofgem, said: 'Our duty is to protect energy consumers, and we set the price cap for that very reason so customers don't pay a higher amount for their energy than they should.
'We expect all suppliers to have robust processes in place so they can bill their customers accurately. While it's clear that on this occasion errors were made, thankfully, the issues were promptly resolved, and customers are being refunded.'
The 10 suppliers have agreed to pay out £5.6m in refunds and almost £1.4m in goodwill payments.
Ofgem found that Octopus had the most customers affected by the error in overcharging, at 20,862 of the 34,048. The other suppliers to give refunds were E.ON Next, Ecotricity, EDF, Outfox the Market, Ovo Energy, Rebel Energy, So Energy, TruEnergy and Utility Warehouse.
A spokesperson for Octopus apologised but added that it occurred on a 'particularly rare' type of meter, affecting only 0.3% of its customer base.
'Mistakes happen, and we're sorry when they do,' a spokesperson said. 'We were following one piece of Ofgem regulation but in doing so accidentally infringed another. We are glad to have now made it right for them.'
Friel said the ruling served as a reminder to all energy suppliers that they must implement the price cap properly and 'do their due diligence'. She added: 'It also shows that, where appropriate, Ofgem is prepared to work with suppliers that fail to comply with our rules.'
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Miatta Fahnbulleh, the minister for energy consumers, said: 'No family should suffer the experience of being overcharged on their energy bills, and companies have an obligation to be accurate in their billing. This government is fighting for working people by driving up protections for consumers in the energy system. It is very important that Ofgem has today taken swift action to fine companies that overcharge consumers.'
On Wednesday, Ofgem ordered Good Energy to pay £150,000 in total to former prepayment-meter customers because of a failure to issue final bills.
Since 2014, Good Energy failed to send final bills to customers within six weeks of customers leaving the company, as is required under energy supplier licences.
Ofgem found that 2,284 customers were affected and the average sum paid per customer was £66.
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