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Scottish Power to pay £1.5m for overcharging customers

Scottish Power to pay £1.5m for overcharging customers
Paloma Kubiak
Written By:
Paloma Kubiak

Scottish Power will pay £1.5m in refunds and compensation after hundreds of direct debit customers were overcharged during an eight-year period, including at the height of the energy crisis.

Last summer, Scottish Power discovered ‘operational errors’ that resulted in 1,699 direct debit customers being charged more than the energy price cap between 2015 and 2023.

The average amount overcharged during these 11 price cap periods was £149 per customer.

The higher rate should only have applied to those who pay by standard credit – on receipt of a bill – according to energy regulator, Ofgem.

To date, Scottish Power has paid a total of £250,000 in direct refunds to affected customers, plus another £250,000 in goodwill payments.

This means the 0.04% of affected Scottish Power customers have automatically received an average £294 back. Customers don’t need to take any action.

The energy giant has also agreed to pay £1m to Ofgem’s Energy Industry Voluntary Redress Fund, which benefits charities and community projects that help vulnerable customers with energy-related support.

‘Serious matter’ but supplier self-reported issue

Ofgem said the error is a “serious matter”, and in setting the redress package, it considered the financial hardship that it could have caused customers, particularly during a period of high energy prices.

However, it also took into account that the energy supplier self-reported the issue and put into place steps to address the failings.

“Had Scottish Power not self-reported and resolved the issues in a timely manner, the redress package sought would have been considerably higher”, Ofgem said.

Dan Norton, Ofgem’s deputy director for price protection, said: “The last few years have been challenging enough for energy customers facing increasing cost-of-living pressures, without the additional hardship of being overcharged. The price cap is there to protect consumers, and we take seriously any breaches of the safeguards we have put in place.

“Suppliers must be vigilant and act quickly to resolve billing errors that impact customers. We will continue to closely monitor all suppliers and will hold them to account if they do not meet the standards set.”

‘We’re so sorry’

Scottish Power said it has put additional controls and monitoring in place to reduce the risk of anything similar happening in the future.

Andrew Ward, CEO of Scottish Power’s customer business, said: “We’re so sorry that a very small number of our customers were affected by this mistake and faced an increased financial burden – especially during a time when energy prices were reaching an unprecedented high and the Government had to step in to provide support.

“Looking after our customers is at the heart of everything we do and our immediate notification to the regulator, swift corrective action and the compensation package agreed with Ofgem show both how seriously we take this matter and our commitment to making it right.”