Utilities firms ordered to compensate customers

17th Aug 2016

The gas and electricity markets regulator has ordered energy companies to refund thousands of utilities customers affected by a meter-reading mistake, just weeks after the regulator’s promise to deliver “a more competitive, fairer energy market for all competitors”. 

The error means that some householders have been paying nearly three times too much for their gas. According to the BBC, one E.ON customer had been paying excessive bills for more than a decade. 

It is thought that the mix-up was the result of suppliers failing to update their records when imperial meters were replaced with metric ones. As a result, some customers have been charged for their consumption as if it was measured in cubic feet, rather than cubic meters. 

Energy firms have been ordered to identify and compensate any customers who have been overcharged by 19 August.

The news comes just weeks after the Competition and Markets Authority issued a report that claimed the big six utilities suppliers have been overcharging customers by £1.4bn a year. 

In response to the watchdog’s findings, Ofgem set out plans to improve competition within the sector. These included capping the amount paid by households using a prepaid meter, and creating a database of customers’ details to ensure customers are being offered the best deals. 

The regulator’s long-term plans may help those affected by overcharging to find better deals elsewhere, but organisations must be prepared to alleviate concerns about data sharing, warns Jo Causon, chief executive of the Institute of Customer Service.

“Customer satisfaction in the utilities sector remains lower than the national average, so any move giving customers more choice will drive innovation, keep the industry agile and responsive, and ensure suppliers are driven to provide the levels of customer service consumers expect,” says Causon.

“Today’s consumers are not fazed by digital solutions, but in the wake of high-profile data breaches they are becoming fiercely protective of their personal information. Any online switching strategy will therefore need to balance the appetite for convenience and accessibility, with ensuring consumers can share personal information with confidence, and are assured of its long-term security.”

Click here to read our blog about regulating to incentivise customer service improvements.

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