Utility Warehouse to pay £650,000 for price cap overcharging
29 Jan 2020 01:46 PM
Utility Warehouse is to refund and compensate 3,430 Warm Home Discount customers with £450,000 after it overcharged them, due to a system error, when the price cap was applied.
The supplier will pay a further £200,000 into Ofgem’s voluntary redress fund, in recognition of the seriousness of the breach and the impact on potentially vulnerable customers.
In December 2019, Utility Warehouse discovered that 3,430 of its customers who receive the Warm Home Discount payment, but pay for their energy when they receive a bill, were paying above the correct default tariff cap level between January and November 2019.
Utility Warehouse quickly self-reported the issue to Ofgem, confirming that an overcharge of £150,000 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 £300,000 of proactive goodwill payments.
An additional £200,000 will be paid into Ofgem’s voluntary redress fund by Utility Warehouse.
Suppliers must be vigilant and ensure that customers, including the vulnerable, are treated fairly. Ofgem’s Enforcement Guidelines strongly encourage companies to promptly self-report potential breaches that may give rise to material harm to consumers, the market or to Ofgem’s ability to regulate.
The total redress package secured by Ofgem reflects the seriousness of the breach, Ofgem’s commitment to protecting the needs of customers who may be likely to be in vulnerable circumstances, and Ofgem’s zero-tolerance approach to compliance with the price cap requirements.
While the overcharging of potentially vulnerable Warm Home Discount customers is a serious matter which must be addressed, Ofgem has decided not to require a larger overall package or to take formal enforcement action on this occasion. This is due to the steps Utility Warehouse has taken to report the matter to Ofgem, correct the situation, and quickly put in place measures to ensure this issue will not re-occur.
Ofgem closely monitors all suppliers’ conduct, including their approach to the implementation of the cap, and will continue to hold suppliers to account if they do not meet their obligations.
Notes to Editors
- About 11 million households are protected by the default tariff cap, which came into effect on 1 January 2019. The cap is temporary, and applies to tariffs for all customers on standard variable and default energy tariffs. Suppliers can price to the level or below the cap, but cannot charge more.
- The default tariff cap is currently £1,179 per annum for the period between 1 October 2019 and 31 March 2020 for households on dual fuel, single-rate based on typical consumption.
- Under the requirements of the default price cap, customers who receive the Warm Home Discount payment should not pay more than the lower Direct Debit level of the cap, regardless of how they pay for their energy.
- For more information about Ofgem’s voluntary redress fund, see: Ofgem appoints Energy Saving Trust to distribute payments from rule-breaking energy companies to charities
- More information on the default tariff cap can be found on our website.
- More information of Ofgem’s Enforcement Guidelines can be found on our website.
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