Scottishpower pays out £1.5m for overcharging its customers
ENERGY giant Scottishpower is paying £1.5 million in refunds and compensation after it charged customers above the price cap during the height of the energy crisis, and has declared it is “so sorry”.
Regulator Ofgem said yesterday that Scottishpower Energy Retail Ltd had “agreed the redress package after the supplier confirmed that between 2015 and 2023, it mistakenly overcharged 1,699 direct debit customers a higher rate, which should only apply to those who pay by standard credit (on receipt of bill)”.
Ofgem said that in weighing the redress package, it had “considered the additional strain and financial hardship” that Scottishpower’s error may have caused customers.
Andrew Ward, chief executive of Scottishpower’s customer business, said: “We’re so sorry that a very small number of our customers were affected by this mistake and faced an increased financial burden especially during a time when energy prices were reaching an unprecedented high and the government had to step in to provide support.”
Ofgem, while it described the error as a “serious matter”, said that the redress package would have been
“considerably higher” had Scottishpower not reported itself to the regulator.
The average amount overcharged during this period was £149 per customer, Ofgem noted.
It added: “As a result, Scottishpower has paid a total of £250,000 in direct refunds to affected customers, plus another £250,000 in goodwill payments – equating to an average of £294 per customer. All payments were made automatically, and customers do not need to do anything.”
Scottishpower has also agreed to pay £1m to Ofgem’s Energy Industry Voluntary Redress Fund, “which benefits charities and community projects that help vulnerable customers with energy-related support”, the regulator said.
Dan Norton, Ofgem’s deputy director for price protection, said: “The last few years have been challenging enough for energy customers facing increasing cost of living pressures, without the additional hardship of being overcharged.
“The price cap is there to protect consumers, and we take seriously any breaches of the safeguards we have put in place.”
Ofgem noted that Scottishpower reported itself to the regulator last summer, when the energy supplier discovered that operational errors had led to direct debit customers being charged the standard credit tariff.
The regulator added: “This overcharge initially began in 2015 and continued across 11 price cap periods to June 2023 – a period when energy prices reached historically high levels, prompting the government to step in and provide additional support.”
In determining this redress package, Ofgem considered the additional strain and financial hardship that Scottishpower’s error may have caused customers during this time.
“While the error is a serious matter, the regulator has taken into account that Scottishpower self-reported the issue and put in place steps to address the failings.
“Had Scottishpower not self-reported and resolved the issues in a timely manner, the redress package sought would have been considerably higher,” it added.
Scottishpower said it had reported the “technical error” – which it noted had “affected a small proportion (0.04%)” of its total customer base between 2015 and 2023 – “as soon as it was discovered last year”.
It added that it had taken “immediate steps to correct the issue”.
Mr Ward added: “Looking after our customers is at the heart of everything we do and our immediate notification to the regulator, swift corrective action and the compensation package agreed with Ofgem show both how seriously we take this matter and our commitment to making it right.”