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Household energy suppliers face £8m bill for 'compensation failures'

Household energy suppliers face £8m bill for 'compensation failures'

The energy regulator reveals a series of penalties related to switching problems and says it now expects more households to be able to change suppliers as the market recovers from the energy price shock.
Three household gas and electricity firms have paid £8m for delays in producing final bills when customers switch suppliers.

Industry regulator Ofgem said more than 100,000 households were affected by failures at E.On Next, Good Energy and Octopus Energy.

It determined that the three firms either missed or delayed compensation payouts that were due when they did not provide a final bill within six weeks, as required when a customer switches to another provider.

Under rules brought in three years ago, customers are entitled to a £30 payment each if a final bill is not produced in six weeks, with a further £30 due if the compensation is not provided within another 10 working days.

Ofgem said the three firms either missed or delayed compensation payments worth £6.3m, with E.On Next accounting for the vast majority of that sum.

Some of the affected households had to wait over a year to receive redress, it found.

The watchdog said they had collectively paid an extra £1.7m to customers or the energy industry voluntary redress scheme (EIVRS), which supports vulnerable households.

The failures were highlighted at a time when families continue to grapple high gas and electricity bills - mostly a consequence of the surge in wholesale costs associated with the war in Ukraine.

Government support for bills is due to end in June as seasonal demand falls, with the energy price cap also tipped to fall back from the following month though still remaining above an annual average of £2,000.

Switching suppliers, a move that was actively encouraged before the cost of living crisis emerged, has largely dried up now that the vast majority of households are off fixed-rate deals.

Competition for customers would be expected to pick up in the event of a stabilisation in the wholesale market.

Experts have suggested, however, a risk that pricing becomes frantic again Europe-wide in the run-up to next winter due to a continuing reliance on natural gas.

Neil Kenward, director for strategy at Ofgem, said of its switching compensation regime: "Ofgem introduced these standards to make sure customers get the service they deserve when switching energy supplier.

"Our rules mean that where energy companies drag their heels, customers are automatically compensated.

"We won't hesitate to hold energy companies to account, as we have done today.

"As the energy market starts to recover, we'll likely see a return to more switching, and this action is a reminder to suppliers that they need to make switching as easy and convenient as possible for their customers, and where they cause undue delay, pay compensation swiftly."
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