UK energy supplier to pay £1.5m in compensation for billing errors

Independent

08-07-2025

Octopus Energy will pay nearly £1.5 million in refunds and compensation for failing to issue final bills to thousands of customers within the mandated six-week period, energy regulator Ofgem has announced.
The watchdog found that more than 34,000 prepayment meter customers, between 2014 and October 2023, did not receive their final bills within the mandated timeframe, a breach of Ofgem's regulations.
The energy supplier has agreed to a total payment of £1.483 million, averaging £43 per affected customer.
This sum comprises £231,000 in refunds for remaining account credit and £1,250,000 in direct compensation, acknowledging the potential impact on customers, particularly vulnerable individuals, Ofgem added.
Ofgem said that although customers have sight of their balance on prepayment meters, it was right that a final bill was produced in order to give them a clear indication of their final debit or credit position.
Beth Martin, director for consumer protection and competition at Ofgem, said: 'It's important that customers receive final bills in accordance with our rules, so they are aware of any credit remaining on their accounts and can reclaim it.
'This is particularly important for prepayment meter customers who are more likely to be in financial difficulty.
'We are pleased that Octopus has now rectified the error and put things right with its customers, offering both refunds and compensation where it's due.
'We will continue to closely monitor compliance with our billing rules, and drive improvements in the sector so customers can expect the highest standards of service from their energy supplier.'
Ofgem said the issue was identified after E.ON Next self-reported the same error to the regulator.
Octopus said Ofgem had spent 'two years investigating an alleged issue with prepayment meter bills that had zero customer complaints and had already channelled millions of pounds into customers' hands'.
It said that while Ofgem's ruling that prepayment customers must receive a final bill upon moving out was 'sensible in principle', it was impossible to implement in most cases.
Some 60% of prepayment customers did not notify Octopus when they moved, Octopus, and other suppliers,relied on slow and unreliable traditional prepayment industry systems for final billing, and Octopus only had bank account details for 10% of prepay customers, while 70% of refund cheques went uncashed due to a lack of forwarding addresses.
Rachel Fletcher, director of economics and regulation at Octopus Energy, said: 'Octopus has always been focused on doing the right thing for customers and thinking outside the box to deliver good outcomes for customers despite imperfect industry systems and data.
'With energy costs soaring, we'd like to see Ofgem put people over policies. People want lower bills.
'We'd like to see Ofgem focusing its efforts on delivering that.'