The energy regulator has ordered power supplier E.ON Next to pay £14.5m in compensation to nearly 250,000 prepayment customers, after an investigation found “unacceptable” failures to pay credit they had on accounts or final bill payments they were owed.
Ofgem found that the customers were affected over an 18-month period from early 2021 to late last year by an error in E.ON Next’s billing system. About 100,000 of the affected accounts were also in credit.
Prepayment customers who transferred to another supplier or terminated their contract did not receive final bills within the required six-week period, and the gas and electricity supplier subsequently failed to make the required compensation payments of £30 or £60.
Because customers did not receive a final bill they were also unaware of any credit remaining on their accounts, worth an average of £51 per affected customer.
Beth Martin, director for consumer protection and competition at Ofgem, said: “Prepayment meter customers are more likely to face financial difficulties, and during a period where households have been facing a significant cost of living crisis. It’s unacceptable that consumers did not receive refunds for credit that was owed to them, or final bills they are entitled to.”
As a result of the failures, E.ON Next has agreed to pay a total of £14.5m in compensation and redress payments, comprising £4.7m in credit refunds, £6.6m in statutory compensation payments that were not made, and £3.2m in compensation.
Ofgem said each affected customer will receive an average of £144.
E.ON Next has also agreed to write off debt held by almost 150,000 prepayment meter customers who closed their accounts within the 18-month period investigated by Ofgem.
Martin said: “E.ON Next has demonstrated an understanding of the significant impact this issue may have had on its customers. It’s encouraging that they self-reported the issue and have worked with us to resolve it, and compensate affected customers to put things right. The action to write off debt will also offer affected households’ peace of mind.”
Energy companies have been heavily criticised for their treatment of prepayment customers, many of whom are vulnerable and on a low income.
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Ofgem moved to temporarily ban the forced installation of prepayment meters by energy companies amid concerns that vulnerable customers were unable to pay to top up, leaving them without heat and power.
This year EDF, Octopus and Scottish Power were given the green light by Ofgem to return to installing prepayment meters under warrant on certain conditions, including making 10 attempts to contact a customer and providing £30 of credit.
Last year, Ofgem ordered E.ON Next to pay £5m in compensation to consumers for poor customer service after a review found “severe weaknesses” including long call waiting times and a high level of unanswered calls.