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Thousands of Utilita Energy customers to receive compensation

Paloma Kubiak
Written By:
Paloma Kubiak

Utilita Energy is to pay compensation to 25,000 customers who will share the allocated half a million pound payment after concerns were raised over the way it awarded credit to vulnerable users.

Potentially affected customers will receive £20 each (£508,260 in total) which in the majority of cases will be applied as a direct credit on their meter. Utilita told that any customers who are not smart-enabled (they would have refused a meter when offered), will receive a cheque and payment will be no later than 23rd December.

Utilita Energy – which offers just one tariff to customers via a pay-as-you-go smart meter – has also agreed to pay £321,740 into the Energy Redress Fund which supports vulnerable users and invests in projects.

The £830,000 total pay-out comes after energy regulator Ofgem uncovered ‘additional support credit failure’.

This extra credit is provided to customers in vulnerable circumstances to give them breathing space while working out other arrangements to pay, so users avoid having no energy.

It reviewed scripts of employees talking to customers, and listened to recorded calls. It also assessed training materials, procedures and policies, and said Utilita “was not taking individual circumstances into consideration” when deciding whether or not to provide additional support credits for those topping-up prepayment meters.

Utilita has 775,000 electricity and 648,000 gas customers, but the 25,000 “included some customers in vulnerable situations and with medical conditions”, Ofgem said.

Back in September, it was issued with a provisional order relating to this issue where it was told to stop the use of call scripts which tell customers that additional support credit isn’t a licence requirement. Further, it was told it also needs to take a customer’s ability to pay into account for all repayment plan calculations and where credit is offered, it must calculate the repayment instalments.

While Ofgem noted it had taken steps to ensure it was compliant, Utilita has agreed to the financial redress package instead of a penalty.

‘Protecting consumers is our top priority’

Cathryn Scott, Ofgem’s director for enforcement & emerging issues, said: “As the energy regulator, protecting consumers is our top priority, and we have strong expectations that energy suppliers must take the individual circumstances of consumers, particularly those who in vulnerable situations, into consideration.

“Prepayment meters are currently relied on by around four million UK households, and the current cost-of-living issue is placing pressure on many households, which in turn is causing more people to require additional support credits to top-up for their prepayment meters.

“While Utilita has moved swiftly to correct these issues and agreed to compensate those affected, this action should serve as a reminder to other suppliers to go further to ensure vulnerable groups are getting the support they need, particularly during the colder winter months.”

What does Utilita say?

A Utilita Energy spokesperson, said: “During the period in question, we provided at least 1.7 million interest-free loans – worth a total of £31m – to customers who, temporarily, could not afford to top-up their prepayment meters and hence asked us for money. We were able to help the vast majority.

“Ofgem has concluded that Utilita potentially did not take individual circumstances into consideration when refusing to provide a further 25,000 customer loans – a minute percentage of the total provided – over the same period.

“We have led the way with Additional Support Credit – even allowing our customers to quickly self-serve the support they need – since launching the service in 2015. However, we feel that the licence provisions on Additional Support Credit, introduced in December 2020, do lack clarity.

“While we feel under the circumstances that the Provisional Order and Ofgem approach was harsh, we have agreed to provide a payment to those customers who were potentially adversely impacted.

“We welcome Ofgem’s positive acknowledgement of our approach.”