Good Energy and Ovo have apologised to thousands of customers and will pay out a combined £4 million over their failure to correctly apply price protections put in place at the height of the energy crisis.
Regulator Ofgem said approximately 18,000 customers were overcharged under either the energy price cap or the Energy Price Guarantee over a period of four years, with Ovo overcharging the lion’s share of consumers more than £1.4 million.
Good Energy chief executive Nigel Pocklington explained the issue was “an accidental flaw in our processes” beginning when the price cap was introduced in 2019.
“Customers paying by direct debit are meant to receive a discount, but affected customers were not automatically switched to a discounted tariff when they changed payment method, and some customers were on the discounted tariff despite not paying by direct debit,” he added.
Almost 7,000 Good Energy customers were overcharged a total of £391,650 in regards to the price cap and Energy Price Guarantee between January 2019 and October 2022.
The supplier reported the matter to Ofgem “as soon as it was apparent”, has since submitted an improvement plan to the regulator and will pay a total of £2 million as a result of its failings.
This includes the £391,650 refund, £368,404 in goodwill payments and £1.25 million to Ofgem’s voluntary redress fund for what the regulator described as “the inadequate systems, processes and repeated inaccurate reporting of information to the regulator over an extended period”.
Pocklington said: “We are very sorry that we let some of our customers down and promise to put things right. We have been contacting those impacted to apologise and issue their refunds and goodwill payments and will be fixing the issue so it does not happen again.”
“Every customer payment method change is now being checked and the formal improvement plan we have submitted to Ofgem includes new automated processes, standards and governance to prevent any similar mistake in future,” he added.
The announcement comes just a day after Ofgem revealed Good Energy is to pay out more than £18,000 over more regulatory failings.
Ovo meanwhile overcharged almost 11,000 customers more than £1.4 million above the government’s Energy Price Guarantee.
As well as issuing refunds and compensation Ovo will pay £10,000 to the redress fund.
Ofgem said the redress package sought “would have been considerably higher” had the retailer not quickly engaged the regulator and resolved the issue in a timely manner.
An Ovo spokesperson said: “We’re very sorry to some of our fixed-price customers who experienced a delay in receiving the Energy Price Guarantee discount. We noticed immediately and self-reported the error to Ofgem.
“The issue has now been fixed and compensation has been paid as an apology. We have also made a voluntary contribution to the redress fund to help support customers in vulnerable situations.”