Energy firms pay £10m for overcharging

HOUSEHOLDS are to receive more than £10million after the energy watchdog found 18 gas and electricity suppliers overcharged customers when they switched to get a better deal.

The companies failed to follow rules intended to ensure that bill-payers are charged according to their old tariff, rather than a new, higher one, while the switching process is taking place.

Big Six firms including British Gas, EDF and Npower were among the 18 offenders that wrongly charged more than a million customers a total of £7.2million between 2013 and 2020.

They have agreed to refund everyone affected and, in some cases, are making additional goodwill payments that bring the total handed over to £10.4million.

The scale of the overcharging emerged after several suppliers reported errors to the regulator, prompting it to ask all firms to assess their practices.

Anna Rossington, of Ofgem, 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.’

Some affected customers were on standard variable or fixed-term deals, and decided to switch supplier. Others were on fixed-term deals and switched to new tariffs with the same supplier.

The regulator said most of the failures were due to suppliers not having proper systems for ensuring price protections were applied in full when customers decided to switch.

It warned firms could face formal action if they fail to properly follow the switching rules in future.

Ovo Energy is to pay £2.8million in redress, while Scottish Power will hand over £2million, British Gas £1.3million and Shell £1.2million.