Ovo Energy must fork out almost £9 million after the regulator discovered 500,000 customers had been sent inaccurate bills for years.
Ovo Energy has been told to repay £8.9 million to customers after the energy regulator uncovered widespread billing issues.
According to Ofgem, more than 500,000 customers had received inaccurate annual statements for three years, with many not receiving a statement at all.
Ofgem said the green energy firm had not informed it about the issues "despite being aware of them”.
It added that Ovo, which last year purchased SSE's retail business, had failed to "prioritise putting these issues right whilst its business was expanding".
The announcement may not come as a surprise to customers of the green energy supplier, as the last five years have seen failings in its IT systems and compliance processes resulting in a lot of inaccurate or incomplete information being sent out.
Customers misinformed
Ofgem’s investigation has revealed several ways in which Ovo Energy’s communications with customers have been inadequate:
Statements and tariffs
Half a million customers either received incorrect annual statements or none at all between July 2015 and February 2018.
At the end of their tariffs, around 10,000 customers weren't given statements explaining their renewal terms or were not moved to new tariffs.
One winter also saw Ovo underestimate the energy consumption entirely, leading to customers being under or overcharged.
The BBC has cited one example of a customer who had been overcharged by £4,500.
Prepayment meters
Ovo Energy promotes its prepayment meters as being ideal for customers who may have struggled to keep up with their energy bills in the past, but these customers have also been affected by the company’s errors.
Some 17,500 prepayment meter customers were not charged at the correct regional level of the prepayment meter cap when they first got their meters.
A further 8,000 customers then ended up paying more than the prepayment meter cap because Ovo hadn’t moved them to new tariffs once their existing ones ended.
Most of these errors have led to customers paying the incorrect amount for their energy, and despite being aware of the issues.
Switch energy suppliers: you could save hundreds
What Ovo Energy has said
Ovo has accepted Ofgem’s findings and acknowledged that its mistakes had led to issues for many of its customers.
"OVO Energy holds itself to high standards, but we have not always got it right," it said in a release earlier today.
"We accept Ofgem’s findings of issues regarding estimation processes, information formatting and pricing errors.”
Who has been refunded?
The energy supplier added it is refunding all customers who were overcharged on the prepayment meter cap.
It has also written off any outstanding payments that were charged at the wrong rates.
The £8.9 million it has agreed to repay in order to avoid a fine will go into a voluntary redress fund to help vulnerable customers, who are likely to have been worst affected by the company’s mistakes.
Am I still owed money?
No. If you were wrongly charged by Ovo Energy, then you should have already been contacted and refunded.
However, if you believe that you have missed out, you should contact Ovo Energy directly through your My OVO account.
What now for Ovo Energy?
Following the investigation into Ovo, Ofgem said the supplier has put measures into place that should prevent this from happening again, including investments in technology and implementing appropriate compliance procedures.
“[Ofgem’s] enforcement action sends a strong message that suppliers must get basic services right all their customers”, said Anthony Pygram, head of enforcement at Ofgem.
“Ovo Energy has accepted the breaches and put processes in place to comply with the rules in future.”
It's worth noting that Ovo Energy is by no means the only provider to have messed up billing. According to Citizens Advice, water, energy, broadband and telephone firms had overcharged customers by more than £24 billion over the last 15 years.
The importance of avoiding the standard tariff
When you come to the end of your initial fixed or variable tariff with an energy supplier, you then move onto its standard tariff.
These are almost always the most expensive tariffs around, and the ones that are subject to the price rises we have seen announced from a host of suppliers.
Moving onto a standard tariff can result in a big bill hike, and 2019 saw customers lose nearly £2.2 billion in savings that they could’ve made by switching, according to challenger energy provider Bulb.
By not providing customers with accurate annual statements regarding their tariffs and renewal terms, Ovo Energy clearly impeded customers from shopping around and saving money.
We already don’t move energy suppliers nearly as often as we should do, and these sorts of errors don’t help that cause.
You can compare the top energy tariffs available in your area using the loveMONEY energy comparison engine.