Five UK energy suppliers were warned on Wednesday by regulator Ofgem that they could face potential fines or a ban on acquiring new customers after it found “moderate to severe” flaws in the way they calculated the rise in household direct debits. , after a sharp rise in energy bills.
The regulator told Utilita, Green Energy UK, TruEnergy, Ecotricity and Good Energy that they could face enforcement action unless they improve quickly, and that they had two weeks to submit action plans.
Ofgem has launched an investigation into household direct debits after company secretary Kwasi Kwarteng alleged that some suppliers had increased customers’ regular payments “above the requirement”, even though the UK energy price cap had risen 54 percent on April 1.
The regulator released its findings, saying that the level of direct debits rose by an average of 62 percent for households between February 1 and April 30 at rates imposed by the price cap, although it insisted it had found no evidence of “unjustifiably high prices”. ” increases.
The regulator warned that the 54 percent increase in the price cap, which dictates bills for 23 million British households, was based on the estimated consumption of a “medium-sized energy consumer”. The actual increase in payments would differ depending on customers’ electricity and gas consumption and other factors, such as whether they had debts to their supplier, it said.
However, Ofgem added that it was “concerned” that half a million households saw a 100 percent increase in their direct debits over the same period. Any suppliers that have increased regular customer payments by that much should review those cases and be expected to refund and offer “goodwill” payments to customers if miscalculations were found, the regulator said.
“Today’s findings on direct debits show clearly that there are market areas where customers are simply not getting the service they need and are rightly expecting in these very difficult times,” said Jonathan Brearley, CEO of Ofgem.
Of the 17 major suppliers examined, five were found to have “moderate to severe” flaws, while seven others were found to have “minor weaknesses”, including the rescued supplier Bulb, Octopus Energy and Ovo. The regulator found no significant problems at only four suppliers: British Gas, EDF, ScottishPower and So Energy.
Among the worst offenders, Ofgem said the problems ranged from weak governance to a “general lack of a structured approach to setting up direct debits to customers”.
Several suppliers disputed the regulator’s findings.
Utilita, which is among the UK’s 10 largest energy suppliers, said it was “shocked and disappointed by Ofgem’s decision to name and disgrace suppliers at this time as we are still working on their follow-up request for additional information and evidence”.
Green Energy UK said it had provided the regulator with “comprehensive information about our debt collection processes” and had “real concerns that the information we have provided has been misunderstood or ignored”.
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London-based Good Energy insisted Ofgem had “raised only one concern about our direct debit management . . . and we are taking swift action to address it”.
TruEnergy said it was working with the regulator to demonstrate “full compliance” with all parts of its supply license.
Ecotricity founder Dale Vince said the group was having issues with a new billing system, but an upgrade would be rolled out in six weeks. “Unfortunately [Ofgem] did not take into account [this] in their assessment,” he added.