Energy firms to refund £10m after overcharging
According to Ofgem, the energy regulator, around one million customers were overcharged to the tune of £7.2m by 18 suppliers who did not follow the price protection rules.
Several suppliers self-reported the mistakes to Ofgem, which then instructed the rest of the industry to self-assess their own practices. This revealed the scale of the issue, which in some cases ran from 2013 to 2020.
What are the price protection rules?
The price protections are supposed to protect a customer’s tariff price when they decide to either switch suppliers or tariffs following a price increase.
According to Ofgem, the affected customers fell into three main categories:
- Those on a standard variable tariff who switched to another supplier but did not have their variable tariff price protected during the switch
- Those on a fixed-term tariff who moved to another supplier but did not have their fixed term tariff protected during the switch
- Those on a fixed-term tariff who switched to another tariff with the same supplier but did not have their fixed-term tariff protected during the switch.
The regulator reported that while the reasons for non-compliance with the rules were varied, most of the time it came down to not having proper arrangements in place to ensure the protections were applied when a customer decided to switch.
The suppliers that broke the rules
Suppliers both large and small were found to have failed to meet these rules. They have agreed to refund all affected customers, and in some cases make ‘goodwill payments’ ‒ compensation in other words ‒ meaning a total outlay of £10.4m.
The table below details the different suppliers who overcharged, the scale of the issue at that supplier, and how much they are paying in redress.
|Supplier||Number of customers affected||Total detriment||Total redress package|
|British Gas/ Centrica||141,415||£391,176.79||£1,269,095.47|
|E (Gas and Electricity)||20,870||£68,777.23||£ 72,772.93|
|Green Star Energy||79,083||£664,661.00||£808,351.00|
|So Energy||10,514||£59,723.56||£ 78,480.89|
Anna Rossington, interim director of retail at Ofgem commented: “Customers should have confidence in switching and not be overcharged when doing so. This case sends a strong message to all suppliers that Ofgem will intervene where customers are overcharged and ensure that no supplier benefits from non-compliance.
“It also shows that, where appropriate, Ofgem is prepared to work with suppliers who have failed to comply with the rules, but who are willing to self-report issues and put things right for their customers.”