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Three energy companies receive penalties following Ofgem investigations

23 May 2014

Three energy companies have received penalties following individual Ofgem investigations.

E.ON, npower and Scottish Power were all found to have failed their customers. E.ON is to pay back a record sum of £12 million to its vulnerable customers breaking energy sales rules and misselling.

Compensation, to be paid to any customer missold to, including automatic payments to some vulnerable customers, is reflective of the harm E.ON caused with its extensive poor sales practices carried out between June 2010 and December 2013.

Ofgem states it found no evidence that E.ON’s senior management set out to deliberately mislead customers but did find that management did not do enough to identify issues or act on problems when discovered.

npower

npower has been fined £125,000 for a reporting error relating to the government’s Feed-in Tariff (FIT) and Renewables Obligation (RO) schemes.

The reporting errors were due to incorrect information being used by npower to calculate the amount of electricity supplied to customers. This resulted in npower underreporting these amounts by 0.08% in 2010-11 and by 0.28% in 2011-12. npower identified and reported the error to Ofgem, and also took steps to prevent this from reoccurring – the error was not repeated in 2012/13.

Scottish Power

Scottish Power is to pay £750,000 to Energy Best Deal following Ofgem’s investigation into price differences between its standard credit and direct debit tariffs.

Under Ofgem rules, suppliers can only have different prices for different payment methods if the amount reflects the costs involved in supplying those accounts. These rules are designed to protect consumers and take into account that some payment methods are more expensive to administer than others.

Between September 2009 and December 2012 Scottish Power did not have a robust process in place to assess the costs associated with different payment types and set prices accordingly. At the time the investigation opened, Scottish Power’s price differential between standard credit and direct debit payment methods was out of line with that of other suppliers. Since the investigation was launched, Scottish Power has significantly reduced its price differential.

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