Energy Suppliers Issue Refunds for Overcharged Contracts

Ofgem has found that 18 energy suppliers have failed to meet the price protection rules for customers and therefore have overcharged over 1 million consumers.

After several suppliers came forward to Ofgem to self-report the overcharging issue, it became a concern that other suppliers were failing to put in customer protection measures which would lead to overcharges over larger groups. Ofgem then requested for all suppliers to make a self-assessment of their business practices to identify further failures in contract renewals. The request revealed that 18 energy suppliers were failing to charge over 1 million consumers correctly and under Ofgem rules.

It is estimated that, collectively, the suppliers have overcharged their consumers by £7.2 million due to not having the correct arrangements to ensure customer protection. To correct this mistake, all suppliers have agreed to make a refund to overcharged customers which will total £10.4 million, including goodwill payments. Payments will also go to the energy redress fund where a refund is not possible.

Affected customers were not protected during the switching process of:

  • Switching to another supplier on a standard variable tariff
  • Switching to another supplier on a fixed term tariff
  • Switching to another tariff on a fixed term with their current supplier

The price protection rules are in place to protect the consumer’s tariff price when they want to switch energy suppliers or tariffs after a price increase. This ensures that the energy market is fair to the customers and accurate to the cost of generation.

Ofgem has not taken formal action due to the cooperation and self-reporting from suppliers but, has made the customer protection rules clear and in the event of further non-compliance, there will be formal action taken against the offending suppliers. This will help to encourage that the proper systems, processes and business practices are in place to comply with the price protection.

Interim director of retail at Ofgem, Anna Rossington, said:

“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.

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More information is available by speaking to Jason Thackray on 0333 9000 246 or email :