Utilita to Pay Out £500k for Overcharging Customers

Piggy bank and money

Utilita has agreed to pay £500,000 in redress after an investigation revealed the challenger energy firm overcharged almost 40,000 customers

Energy market watchdog Ofgem found that Utilita prepayment customers paid over £125,000 more than they should have between July 2018 and September 2019.

Customers on prepayment tariffs are often among the most vulnerable and usually pay more for their energy than those who pay by other means, such as monthly direct debit.

Those affected have now been reimbursed as part of a £500,000 compensation package, with a further £10 offered as a ‘goodwill’ payment, which will increase to £15 if the customer is on the Priority Services Register.

There will be a further £140 given to 900 Utilita customers who applied for the Government's Warm Home Discount scheme but were unsuccessful.

The supplier will also pay an additional £45,000 into Ofgem’s Voluntary Redress Fund, which supports vulnerable households and the development of innovative energy products and services.

Who was overcharged by Utilita?

Energy bill and mangnifying glass

Ofgem’s investigations found that around 6,600 prepayment customers were overcharged a total of £22,700 over the prepayment price cap. A further 33,000 paid over £105,000 above their advertised tariff rate, but below the prepayment cap.

Ofgem’s energy price cap was first introduced in January 2019 and limits how much suppliers can charge for gas and electricity.

It is currently set at £1,042 for customers on standard variable tariffs, while prepayment tariffs are capped at £1,069.

Utilita reported the issue itself and its CEO, Bill Bullen, said: “I would like to apologise unreservedly to all customers who were temporarily out of pocket. I am sorry that 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.”

Cathryn Scott, Director of Enforcement and Emerging Issues at Ofgem, 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 to put things right quickly.”

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