The big six have accumulated the surplus cash over the last six years from unclaimed credit balances left on payment accounts by around 10 per cent of energy users, and averaging £50 per account.
The new scheme will aim to return the cash balance to consumers, and prevent unclaimed funds from accumulating in future. Any funds which are left unclaimed will then be put towards helping vulnerable customers, according to the plans.
Ofgem chief executive Dermot Nolan said the scheme is an important part of addressing the lack of trust that consumers have towards the energy industry, and warned that a similar situation should not be allowed to happen again.
“Suppliers must now do everything within their powers to return the money and prevent a similar situation from happening again. Failure to deliver on the initiatives announced today could trigger further action by Ofgem, including enforcement,” Nolan said.
Trade group Energy UK has urged energy users to make use of the MyEnergyCredit online tool which helps consumers take the first steps towards reclaiming the money owed to them.
The group’s chief executive Angela Knight added that “inevitably” some customers will not be found by their suppliers which are trying to return their credit, and that this money will be put towards tackling fuel poverty.
“From now on, after two years, any monies remaining from unclaimed credits will be put towards funds to help the fuel poor and vulnerable. This will amount to at least £65 million over five years. Suppliers will kick start this new deal with £38 million for 2014 and 2015 combined,” Knight said.
Executive director of consumer group Which? Richard Lloyd welcomd the move, saying it is “unacceptable” for energy companies to sit on millions of pounds owed to consumers, adding that Ofgem was right to step in to deal with the matter.
“To help restore consumer trust in the energy market, suppliers must return this money as soon as possible and be clear about what customers should do when they close their accounts. Any money that can’t be reunited with the customer should be put towards helping vulnerable people struggling with their bills,” Lloyd said.