CORRECT: OVO Energy To Pay GBP8.9 Million After Overcharging Customers

(Correcting that the companies are to pay redress to customers, not a fine.)

(Alliance News) - Ofgem on Wednesday said OVO Energy Ltd, which recently bought SSE PLC's household energy unit, and Telecom Plus PLC will pay redress to customers after overcharging them.

OVO agreed to pay an GBP8.9 million redress, the UK utilities regulator said, after overcharging and giving customers "inaccurate or incomplete information". The regulator said this was due to IT issues.

Ofgem said: "These breaches occurred while OVO did not put enough attention on ensuring its processes and governance were capable of complying with Ofgem's rules. OVO has since put in place measures to make sure this doesn't happen again, including investments in technology and implementing appropriate compliance procedures."

An investigation by the regulator found OVO sent over 500,000 inaccurate annual statements to customers between July 2015 and February 2018. Some consumers did not even receive an annual statement, Ofgem noted.

The watchdog said: "OVO underestimated consumption over one winter, meaning customers were under or overcharged. Around 10,000 customers were not given statements of renewal terms when tariffs were ending or were not moved to new tariffs when their existing tariff ended."

Ofgem added: "17,500 prepayment meter customers were not initially charged at the correct regional level of the prepayment meter cap. A further 8,000 customers ended up paying above the level of the prepayment meter cap due to OVO not moving them to new tariffs when their existing tariff ended."

Some of the errors actually led to some customers being undercharged. OVO also did not self-report the majority of the issues, despite being aware of them, the regulator noted, and Ofgem also took aim at the company for being "slow to put things right".

SSE earlier in January completed the sale of its UK household energy and services business SSE Energy Services Group Ltd to OVO for GBP500 million. OVO's purchase has made it one of the largest energy suppliers in the UK, just a decade after its founding.

Utility Warehouse, a subsidiary of London-listed Telecom Plus, will pay GBP650,000 for price cap overcharging, Ofgem said.

Ofgem explained the company will refund a total of GBP450,000 to 3,430 customers who were eligible for the Warm Home discount scheme, under which low-income consumers can get discounted energy bills.

The customers were overcharged due to a system error, Ofgem explained.

"The supplier will pay a further GBP200,000 into Ofgem's voluntary redress fund, in recognition of the seriousness of the breach and the impact on potentially vulnerable customers," Ofgem said.

"Utility Warehouse quickly self-reported the issue to Ofgem, confirming that an overcharge of GBP150,000 had occurred. The supplier's systems were swiftly updated to correct the issue. Utility Warehouse is in the process of issuing full refunds to all 3,430 customers who were overcharged, in addition to an extra GBP300,000 of proactive goodwill payments."

Telecom Plus shares were 0.7% lower at 1,519.69 pence each in London on Wednesday morning.

By Eric Cunha; ericcunha@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.