Ovo Energy slapped with £8.9m fine for inaccurate billing
Ovo Energy has been charged £8.9m by industry regulator Ofgem after inaccurate information on bills led to some customers being charged too much.
The challenger firm, which recently became one of the UK’s largest energy suppliers, fell foul of the watchdog after incorrect annual statements were sent to more than 500,000 customers between July 2015 and February 2018.
In addition, the firm underestimated energy consumption over one winter, meaning some customers were under or overcharged.
Around 10,000 customers were not given statements of renewal terms when their tariffs were ending or were not moved to new tariffs when their existing tariff ended.
Furthermore, 17,500 prepayment meter customers were not initially charged at the correct regional level of the prepayment meter cap, whilst a further 8,000 customers ended up paying above the level of the meter cap due to Ovo not moving them to new tariffs when their existing tariff ended.
The watchdog found that despite being aware of the mistakes, Ovo did not report the majority of them.
The firm has now corrected these breaches and refunded customers who were overcharged on the prepayment meter cap.
Anthony Pygram, director of conduct and enforcement at Ofgem, said:
“Ovo Energy billed a number of its customers incorrectly and issued them with inaccurate information. The supplier did not prioritise putting these issues right whilst its business was expanding.”
Ovo issued the following statement in response: “Ovo holds itself to high standards, but we have not always got it right. We accept Ofgem’s findings of issues regarding estimation processes, information formatting and pricing errors.
Get the news as it happens by following Morning Wire on Twitter
“We are proud of our record. In particular, during the time these infringements occurred, we were voted uSwitch Supplier of the Year 4 out of 5 times and achieved a customer satisfaction score of 96 per cent – the highest in the survey’s 11 year history at the time.”
Earlier this month Ovo completed the acquisition of SSE’s household energy business for £505m, taking on about 3.5m new customers in the process.
The deal means that the firm is now the UK’s second largest supplier, breaking the Big Six’s stranglehold on the UK’s domestic market.
Fellow supplier Utility Warehouse was also hit by a £650,000 fine after overcharging nearly 3,500 warm home discount customers when the price cap was applied.
The firm will pay £450,000 back to customers in the form of refunds, with the remainder going to Ofgem’s voluntary redress fund.
Uswitch energy expert Rik Smith said: “Customers must come first. Ovo has to get these things right – they’re a big, well established company about to become even bigger when they take on another 3.5m customers from SSE.
“The news that they’ve been fined nearly £9m for making a mess of things will come as a shock to many people.
“Meanwhile Utility Warehouse has been fined for overcharging people who already find it hard to pay their energy bill, as the receive the warm home discount. For some it is a life saver and a system error such as this would have been extremely concerning for these vulnerable customers.”