South West energy firms ordered to pay out £4m after over-charging customers

Two South West energy companies have been ordered to pay out £4m after over-charging customers.

The energy regulator said Wiltshire firm Good Energy and Bristol based Ovo will have pay back money to their customers.

Customers of the two firms who have been overcharged are to receive a combined total of £2.7m from Good Energy and OVO Energy following an investigation by Ofgem.

Consumers in a vulnerable situation across the UK will also benefit from an additional £1.25m in payment to Ofgem’s voluntary redress fund in recognition of the suppliers’ failure to apply the price protections put in place at the height of the energy crisis.

Ofgem found that approximately 18,000 customers did not receive the protection they were due, as errors by the two suppliers saw them charged above the maximum rates allowed under either the energy price cap or the Energy Price Guarantee Government scheme.

The failings were:

• Good Energy overcharged almost 6,966 customers a total of £391,650 with reference to the price cap and Energy Price Guarantee between January 2019 and October 2022. This was due to operational failures to adjust tariffs after customers changed their payment method.
• Between October 2022 and March 2023, a total of 10,987 OVO Energy customers were overcharged £1,492,917 above the Government’s Energy Price Guarantee, brought in last winter to protect consumers as households struggled to cope with rising energy prices.

Those customers affected will now be automatically refunded and receive compensation. The average amount paid to Good Energy customers will be £109 while OVO customers will receive an average of £181.

Customers affected do not need to do anything; they will be automatically refunded.

Additionally:

Good Energy will also pay £1.25 million to Ofgem’s voluntary redress fund for the inadequate systems, processes and repeated inaccurate reporting of information to the regulator over an extended period.

OVO will also pay £10,000 to the redress fund for reporting issues. The redress package sought would have been much higher had OVO not quickly engaged Ofgem and resolved the issue in a timely manner.

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.”

Good Energy has now submitted a formal improvement plan, as required by Ofgem, to ensure appropriate governance and processes are put in place to prevent similar overcharge and data reporting issues from recurring.