energy suppliers set to pay £4m in compensation for overcharging customers during energy crisis

Ovo Energy and Good Energy are set to pay £4 million in compensation after overcharging customers during the energy crisis.

Some 18,000 households did not receive protection they were due, Ofgem said.

Ofgem said it was ‘totally unacceptable’ that people were overcharged during an ‘already so challenging and stressful time’ for consumers.

Errors by the two suppliers meant some people were charged above the maximum rates allowed under either the energy price cap or the Government’s Energy Price Guarantee scheme.

The Government’s scheme brought the typical household energy bill down to around £2,500 a year in Britain and £2,100 in Northern Ireland.

Ofgem says it is ‘totally unacceptable’ that energy customers were being overcharged during an ‘already so challenging and stressful time’ for consumers

The average amount paid to Good Energy customers will be £109 while Ovo customers will receive an average of £181, Ofgem has said

Good Energy overcharged more than 6,900 customers between January 2019 and October 2022, while Ovo overcharged nearly 11,000 customers between October 2022 and March 2023.

The affected households will receive a combined total of £2.7 million from the two companies while an extra £1.25 million will go to vulnerable customers in the UK under Ofgem’s voluntary redress fund.

The average amount paid to Good Energy customers will be £109 while Ovo customers will receive an average of £181, Ofgem said.

Dan Norton, deputy director of retail at Ofgem, said: ‘Protecting consumers is always our top priority, and we expect suppliers to ensure customers pay no more than the level of the price cap or Energy Price Guarantee – schemes put in place with the very purpose of helping people.

‘It is totally unacceptable that Good Energy and Ovo Energy customers were overcharged, particularly at a time that is already so challenging and stressful for consumers across the UK.

‘Energy suppliers should hear this loud and clear: we expect suppliers to act with the utmost care and integrity.

‘We will continue to hold them to account if they do not meet their customer protection or reporting obligations.’

Both suppliers self-reported the issues to Ofgem, which the regulator said meant the redress packages were lower than they could have been.

In February, Ofgem dropped its cap on the amount energy suppliers are able to charge by around £1,000

A spokesperson for Ovo said: ‘We’re very sorry to some of our fixed-price customers who experienced a delay in receiving the Energy Price Guarantee discount. We noticed immediately and self-reported the error to Ofgem.

‘The issue has now been fixed and compensation has been paid as an apology.’

Nigel Pocklington, Good Energy’s chief executive, said: ‘We are very sorry that we let some of our customers down and promise to put things right.

‘We have been contacting those impacted to apologise and issue their refunds and goodwill payments and will be fixing the issue so it does not happen again.’

He added that the firm has submitted a formal improvement plan including new automated processes and standards to prevent any similar mistakes in the future.

Back in February, Ofgem dropped its cap on the amount energy suppliers are able to charge by around £1,000. 

This meant that the energy price cap fell from £4,279 per year to £3,280 from April 1.