Energy firms, including British Gas, to refund customers
One million energy customers are to be reimbursed after 18 energy providers broke switching rules and overcharged them by a total of £7.2 million over a seven-year period. Find out which suppliers were found in breach, as well as what exactly they did wrong, below.
Ofgem has ordered the providers, which apart from British Gas include other Big Six giants EDF Energy, Npower and Scottish Power, to pay back the million households that were overcharged when they switched suppliers in order to get a better deal.
The providers have agreed to pay back the money charged as a result of failure to follow price protection rules, as well as additional goodwill payments bringing the total that will be reimbursed to customers around £10.4 million.
How did providers break the rules?
Ofgem says that providers were non-compliant in a number of ways, but that most simply “had not put adequate arrangements in place” to make sure customers’ tariffs were protected while switching, either to another supplier or to another tariff. If you decide to switch because your provider puts up its prices, your tariff should be safeguarded, but several firms were said not to be respecting this rule.
It’s been reported that the issue was self-reported by several of the providers to the regulator, which then encouraged providers to assess their practices. While the firms will face no fines on top of the money they have agreed to pay back, Ofgem says that further non-compliance will result in formal action being taken in accordance with its Enforcement Guidelines.
Which energy customers will be refunded?
According to Ofgem, three main groups of customers were affected by their providers’ non-compliance. They were:
- Customers on a standard variable tariff who switched to another supplier but did not have their variable tariff price protected during the switch.
- Customers on a fixed tariff who switched to another supplier but did not have their fixed term tariff protected during the switch.
- Customers on a fixed tariff who switched to another tariff with the same supplier but did not have their fixed price protected during the switch.
If any one of the above points describes your experience with an energy provider in the period from 2013 to 2020, you could be eligible for a refund. Customers shouldn’t expect a big payout in return for being overcharged during this period, unfortunately, with the average payout being around £10.40.
The refunds should be handled by each supplier automatically, but d get in touch with your provider to find out whether you will be reimbursed if you’ve heard nothing from them.
Which providers owe the most?
The providers with the most to pay back to their customers are, by and large, among the industry’s biggest hitters. Ovo Energy, now the UK’s second largest provider in terms of customer base, owes the most, having to pay back £2.8 million to its customers and former customers.
Scottish Power is next on the list with a £2 million compensation bill, not that it will hurt too much, as this month it was revealed it has more than doubled its profits in household energy. British Gas is next, having to pay out £1.3 million, while Shell Energy must fork out £1.2 million to its customers. Here’s the full list of providers in the red:
|Provider||Number of customers affected||Amount to be paid back|
|Green Star Energy||79,083||£808,351.00|
Ofgem sends a strong message
The redress packages, as well as the message from Ofgem that further lack of compliance with this regulation, represent the regulator’s commitment to ensuring a competitive market where customers are protected when they want to switch to a better deal. Anna Rossington, interim director of retail at Ofgem, had the following to say:
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.
She went on to say that, when necessary, “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.” It’s a firm but fair approach, and we’re pleased to see that fair treatment of customers in the energy market is being enforced by the proper public bodies.