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Utilita to pay £500,000 redress after overcharging customers

Paloma Kubiak
Written By:
Paloma Kubiak

Utilita is to pay half a million pounds in redress after overcharging tens of thousands of prepayment meter customers.

The energy company was found to have overcharged 40,000 prepayment meter customers by over £125,000.

An investigation by energy watchdog Ofgem revealed around 6,600 customers were overcharged by around £22,700 above the prepayment price cap.

Around 33,000 customers were overcharged £105,000 above the amount they should have paid under the advertised tariff but below the prepayment cap.

Utilita self-reported to the regulator, after realising it had overcharged customers between May and September 2019.

After opening an investigation earlier this year, Ofgem found Utilita overcharged around 2,000 gas prepayment customers by £14,000 in total above the level of the prepayment price cap.

Further, between July 2018 and September 2019, Utilita has overcharged around 4,600 electricity prepayment customers by around £8,700 above the price cap.

Under Ofgem rules, suppliers can’t charge prepayment meter customers more than the level of the cap. The cap is set by Ofgem and it monitors the level.

As well as agreeing to pay £500,000 in redress, Utilita has refunded all customers affected in full.

Under the redress package agreed between Ofgem and Utilita, Utilita will make:

  • A £10 goodwill payment to all existing customers who were overcharged, increasing to £15 if the customer is on the Priority Services Register. This register ensures appropriate support to customers in vulnerable circumstances.
  • A £140 payment to the approximately 900 existing customers affected, who had applied to Utilita for the Warm Home Discount (WHD), but were unsuccessful.
  • An additional payment of £45,000 to be paid into Ofgem’s Voluntary Redress Fund (currently administered on Ofgem’s behalf by the Energy Savings Trust).

Cathryn Scott, director of enforcement and emerging issues, said: “Ofgem closely monitors suppliers’ compliance with the price cap, which ensures consumers pay a fair price for their energy. This case sends a message to all suppliers that Ofgem will intervene if they charge customers above the level of the cap or above advertised tariffs. It also shows that, where appropriate, Ofgem is prepared to work with suppliers who have failed to comply with their obligations, but who have self-reported and are willing put things right quickly.”

Bill Bullen, Utilita’s CEO, said: “I would like to apologise unreservedly to all customers who were temporarily out of pocket. I am sorry we did not issue prompt refunds during the period in question.

“We know we can always improve and will always take on board criticism of any legitimate failings. Ofgem made it clear that the overcollection was caused by our failure to carry out an administrative process that corrected the temporary overcollection. I can reassure customers that the issue was not with the tariff itself, which was confirmed to be in accordance with the cap.”

Utilita will be writing to all those customers who will receive compensation.