Energy supplier Ovo Energy has agreed to pay a £10.4 million penalty following an investigation by the energy regulator Ofgem into its historical practices concerning prepayment meter customers. The settlement addresses a range of issues identified by Ofgem, primarily related to how Ovo, and its subsidiary SSE, managed these accounts, particularly for vulnerable individuals.
The investigation found that between 2017 and 2022, Ovo and SSE, which Ovo acquired in 2020, failed in several key areas. This included overcharging certain prepayment customers, not offering appropriate debt repayment plans, and inadequately supporting customers in financial difficulty. Concerns were also raised about the information provided to customers, with some being given incorrect energy efficiency advice or not having their accounts accurately set up on prepayment meters. The regulator highlighted that these failures could have had significant impacts on customers, particularly those already struggling with rising energy costs.
Ofgem's findings underscore the critical importance of energy companies adhering to their licence conditions and ensuring fair treatment for all customers, especially those on prepayment meters who often face greater challenges in managing their energy usage and costs. Prepayment meters are typically used by households with lower incomes or those managing debt, making them particularly susceptible to the impact of incorrect billing or insufficient support.
The £10.4 million payment comprises two main components: direct redress for affected customers and a contribution to Ofgem's Energy Redress Fund. The Energy Redress Fund supports charities and community projects that help vulnerable consumers and tackle the causes of energy hardship. While specific details on the number of customers directly affected and the individual amounts of redress have not been fully disclosed, the agreement aims to compensate those who experienced financial detriment due to the identified failings.
This enforcement action serves as a stark reminder to all energy suppliers of their obligations to protect customers, particularly in the current climate of high energy prices and increasing cost of living pressures. Ofgem has consistently emphasised that it expects companies to have robust systems and processes in place to ensure accurate billing, provide clear information, and offer appropriate support to all customers, especially those in vulnerable circumstances.
Ofgem's Chief Executive stated that the settlement sends a clear message that suppliers must prioritise their customers, particularly those who are struggling. The regulator continues to monitor the market closely and has indicated it will not hesitate to take further action where companies fail to meet their responsibilities.
Source: Ofgem