Ovo and Good Energy forced to refund overcharged customers
- Published
Thousands of Ovo and Good Energy customers are to get a refund after the regulator found that the firms had overcharged households.
Ofgem has ordered the energy firms to pay a total of £4m, £2.7m of which will be split between 18,000 homes.
The average repayment to affected Ovo customers will be £181, while Good Energy will refund £109.
The regulator said the suppliers had charged people above the rate allowed under the two energy price caps.
Dan Norton, deputy director of retail at Ofgem said: "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."
Those customers who have been affected will be automatically refunded.
The remaining £1.25m will be paid solely by Good Energy into Ofgem's voluntary redress fund, which aims to help "consumers in a vulnerable situation across the UK".
The regulator said the payment was "in recognition of the suppliers' failure to apply the price protections put in place at the height of the energy crisis".
It is the second time in two days that Good Energy has been punished by Ofgem.
On Wednesday, Good Energy, alongside E.On Next and Octopus Energy, were told to pay a total of £8m for delaying or failing to make compensation payments to customers who have switched supplier.
Ofgem said that Good Energy and the other two companies had either missed or "unduly delayed" compensation payments "which are due if a supplier does not provide a final bill within six weeks when a customer switches to another provider".
In its latest action, Ofgem said it found that 18,000 customers of Ovo and Good Energy "did not receive the protection they were due" when they were charged more than the maximum rate allowed by either the regulator's price cap or the government's Energy Price Guarantee scheme.
The price cap is set by the regulator Ofgem which decides how much suppliers can charge per unit of gas or electricity.
The Energy Price Guarantee scheme was introduced by the government in October last year and limits the average household bill. The limit is currently £2,500 which will be in place until June.
Next week, on 25 May, Ofgem will announce its latest price cap.
If it is lower than the current Energy Price Guarantee, customers will be charged according to the new price cap. But if the cap is still above the government's scheme, their bills will be limited under the Energy Price Guarantee.
Mr Norton said that both Ovo or Good Energy could have ended up paying "considerably higher" compensation if the firms had not self-reported the issues to the regulator.
In Good Energy's case, it overcharged almost 6,966 customers a total of £391,650 in relation to the price cap and the Energy Price Guarantee scheme between January 2019 and October 2022.
Good Energy said that "customers who switched payment method to direct debit were not receiving their discount for doing so".
The company's chief executive, Nigel Pocklington, said it was "very sorry that we let some of our customers down and promise to put things right".
Meanwhile, 10,987 Ovo households were overcharged £1,492,917 above the Energy Price Guarantee scheme between October 2022 and March this year.
Ovo also said it was "very sorry", adding the issue "has now been fixed and compensation has been paid as an apology".
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