Eon is £6.8 million out of pocket after paying the lion’s share of an £8 million Ofgem compensation package for customers who suffered long delays receiving final bills when switching suppliers.
Three domestic suppliers – Eon Next, Good Energy and Octopus Energy – have paid a total of £8 million for delaying or failing to make statutory compensation payments owed to energy customers.
All three companies either missed or unduly delayed the compensation payments, which are due if a supplier does not provide a final bill within six weeks when a customer switches to another provider.
The pay-outs mark the first time that Ofgem has taken compliance action on its Guaranteed Standards of Performance (GSOP), which the regulator introduced in May 2020 to reduce delays in final billing compensation.
The rules ensure that suppliers provide compensation when energy supplier switches are delayed, customers are erroneously switched or final bills produced too late.
Under the GSOP, customers are entitled to a standard one-off compensation payment of £30 if a final bill is not produced within six weeks. If this compensation is not provided within a further 10 working days, a customer is due an additional GSOP payment of £30.
While engaging with the companies on compliance, Ofgem established that the three suppliers either missed or unduly delayed GSOP compensation payments worth £6,305,925.
More than 100,000 customers were affected, some of whom waited more than a year to receive compensation.
The problems occurred because the suppliers’ billing processes and systems were not set up to deliver the GSOP payments in line with the timeframes set out in the regulations, Ofgem said.
The biggest portion of the £6.3 million sum has been met by Eon Next, which is paying a total of £5.5 million to almost 95,000 customers.
Octopus Energy has paid approximately £750,000 to 19,000 customers and Good Energy £18,000 to almost 350.
The three suppliers paid an additional compensation of £1.7 million to customers or the Energy Industry Voluntary Redress Scheme (EIVRS), which supports vulnerable consumers.
This included £1.3 million from Eon Next to the EIVRS, which will be spent on targeted local energy saving projects.
Ofgem said all three suppliers have also now updated their billing processes and systems to ensure payments will now be made in line with the regulations.
Neil Kenward, director for strategy at Ofgem, said: “Our rules mean that where energy companies drag their heels, customers are automatically compensated. We won’t hesitate to hold energy companies to account, as we have done today.
“As the energy market starts to recover, we’ll likely see a return to more switching, and this action is a reminder to suppliers that they need to make switching as easy and convenient as possible for their customers, and where they cause undue delay, pay compensation swiftly.”
An Eon spokesperson said: “Last year, we told Ofgem that our own internal checks uncovered that we had not added a Guaranteed Standards Of Service compensation payment for final bills which were sent out to some of our customers after the stipulated six-week timeframe. At the time, we contacted affected customers to apologise and sent them their missing payments. We also paid £1.3 million to Ofgem’s Energy Industry Voluntary Redress Scheme Fund in recognition of our failings. We have since taken steps to ensure this error does not happen again.”