Scots energy firms are ordered to pay millions for overcharging

SCOTTISH energy firms have apologised after being among 18 gas and electricity suppliers told to pay £10.4 million in compensation to one million homes for overcharging.

Energy regulator Ofgem said customers were collectively overcharged £7.2 million after their suppliers failed to follow price protection rules, which safeguard a customer’s tariff price when they decide to either switch suppliers or deals after a price increase.

Glasgow-based Scottishpower has been hit with a £1.97m compensation bill owed to 157,236 affected customers and has issued an apology.

Perth-based SSE Energy Services, owned by OVO Energy, has to pay out £983,334 to 132,620 users, while British Gas – which trades as Scottish Gas in Scotland – has a £1.27m bill.

Hardest hit was OVO Energy, which has a £2.8m compensation bill.

It said several suppliers self-reported the issue to the regulator, which then prompted all firms to assess their practices, which revealed failures among 18 suppliers between 2013 and 2020.

The firms have agreed to refund all those affected and, in some cases, make additional goodwill payments to the tune of £10.4m in total, Ofgem said.

A Scottishpower spokesman said: “We regret that some of our customers did not have their price protected during a switch or move as they should have done and we would like to apologise to any former or current customers of Scottishpower affected by this, all of whom have now been refunded.

“Our affected customers were overcharged by an average of £9.22 and we have now returned any overcharge to those customers and have also provided over half a million pounds of goodwill, the majority of which has been paid to Ofgem’s Voluntary Redress Fund which helps support energy consumers in vulnerable situations.

“It is clear that there have been some issues implementing this process across the industry, with just under half of energy suppliers failing to fully protect customers’ prices during a switch or move.

“We have worked hard to put further measures in place to avoid this happening again.”

A spokesman for OVO, added: “We are very disappointed to have fallen short of our regulatory responsibilities. We have apologised and returned money to our members and worked with the regulator to identify and fix the historical issues.

“Ofgem has recognised the steps we have taken to refund and contact all members due compensation as well as ensure that we are compliant going forward. We have also made an additional voluntary contribution to the redress fund to help support customers in vulnerable situations.”

Ofgem said the suppliers did not adhere to price protection rules, which protect a customer’s tariff price when they decide to either switch suppliers or tariffs after a price increase.

Customers affected include those on standard variable and fixed term deals who switched to different suppliers, as well as those on fixed term deals who switched to another deal with the same supplier.

The regulator said most of the failures were due to suppliers not having proper plans in place to make sure the protections were applied in full when customers decided to switch.

Anna Rossington, interim director of retail at Ofgem, said: “Customers should have confidence in switching and should 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.

Natalie Hitchins, head of home products and services with the consumer organisation Which?, said: “It is right the regulator has intervened and sent a clear message to suppliers that this kind of behaviour is unacceptable.

“Firms must now act quickly to help affected customers, making it clear who is owed a refund and then doing so swiftly and without hassle.”

We regret that some of our customers did not have their price protected