25,000 Utilita Energy customers to receive compensation after Ofgem uncovers Additional Support Credit failure
14 Dec 2022 11:29 AM
- Utilita Energy to pay out £830,000, after Ofgem assessment raised concerns around the provision of additional support credits for prepayment meters customers
- Over 25,000 customers were potentially affected, including those with medical issues and those classed as vulnerable
- Customers potentially affected to receive £20 each (totalling £508,260) in most cases as a direct credit on their meter. £321,740 will also be paid into the Energy Redress Fund, which supports energy consumers in vulnerable situations, amongst other innovation and carbon emission reducing investments
Utilita Energy (‘Utilita’) has agreed to pay out £830,000, after a robust assessment by regulator Ofgem suggested the supplier was not taking individual circumstances into consideration when deciding whether or not to provide additional support credits needed for customers topping up prepayment meters.
The assessment was based on a review of scripts of employees talking to customers, training materials, procedures, policies and recorded calls with customers.
Utilita currently serves over 775,000 electricity and 648,000 gas customers, and those affected included some customers in vulnerable situations and with medical conditions.
Utilita was issued with a Provisional Order related to this issue on Friday 9 September 2022, which lapsed last week (Friday 9 December 2022) as Utilita has taken steps which we consider to be appropriate to secure compliance. In recognition of its failings, Utilita has now agreed to this financial redress package instead of a penalty.
This means those customers affected will get the payment directly and more quickly.
Cathryn Scott, Ofgem’s Director for Enforcement & Emerging Issues, said: “As the energy regulator, protecting consumers is our top priority, and we have strong expectations that energy suppliers must take the individual circumstances of consumers, particularly those who in vulnerable situations, into consideration.
“Prepayment meters are currently relied on by around 4 million UK households, and the current cost of living issue is placing pressure on many households, which in turn is causing more people to require additional support credits to top-up for their prepayment meters. While Utilita has moved swiftly to correct these issues and agreed to compensate those affected, this action should serve as a reminder to other suppliers to go further to ensure vulnerable groups are getting the support they need, particularly during the colder winter months.”
Of the £830,000, the sum will be split between the following purposes:
- £20 paid to all those customers who were potentially affected by the issue (totalling £508,260); and
- Utilita making a contribution to the Voluntary Redress Fund (‘VRF’) totalling £321,740, which is designed to support vulnerable consumers with their energy, as well as invest in innovation projects and carbon emission reductions.
This action also forms part of the wider work Ofgem is doing to ensure suppliers are delivering for consumers via a series of market-wide reports deep diving into supplier policies, governance, procedures and practices, which have highlighted where urgent improvements are needed.
As part of the UK Government’s Energy Bill Support Scheme, prepayment customers should receive smart meter credits or payment vouchers (if they have a traditional prepay meter) providing them with tops-up for their meter. There is more information about the vouchers available on the UK Government’s website. If you are a PPM customer and have not received your credit or voucher, please contact your supplier straight away
Notes to Editor
Ofgem has recently launched a new webpage outlining Energy Advice for households. This includes important issues such as finding a supplier, making complaints, compensation and avoiding and reporting energy related scams.
On 9 September 2022, Ofgem issued Utilita a Provisional Order as it appeared that Utilita was contravening or was likely to contravene Supplier Licence Conditions 27A.5-27A.7 and 27.8(b), concerning the application of Additional Support Credit (ASC) and assessment of customers' ability to pay when calculating instalments for repayment, and SLCs 26.4 and 26.5(d), in relation to Utilita's assessment on whether prepayment (PPM) is the safest option for vulnerable households.
Having reviewed information provided by Utilita, Ofgem was concerned about Utilita’s processes to assess if prepayment was safe and reasonably practicable for some of its customers. Ofgem was also concerned that Utilita had failed to consider the customer's individual circumstances (including medical conditions and vulnerabilities) when assessing Additional Support Credit provision. The redress is being paid to customers who had a request for Additional Support Credit declined in a particular period (and the decline may have been incorrect).
See Energy Redress Fund for more information about where the funds will be distributed.
See Difficulty Topping-Up Your Prepayment Meter for more information about Additional Support Credits.
ASC is an interest-free loan by a supplier to assist a customer who may not be able to top-up their prepay meter because they do not have any money to do so.