One of the leading energy suppliers in the UK has promised to reimburse thousands of customers who were overcharged between 2008 and 2011.
E.ON referred the matter to industry regulator Ofgem earlier this month. The energy firm overcharged around 94,000 customers who switched suppliers ahead of four major price rises.
The mistake was made when E.ON charged fixed-term customers an exit fee for switching suppliers, which is prohibited under rules established by the industry. Some customers were also charged at the post-rise rate despite having made clear their intention to switch suppliers before the new rates came into effect.
After discussing the error with Ofgem, E.ON announced that it will pay 1.4 million to customers who had been overcharged. Affected customers can expect to receive 14.83 each on average. E.ON also agreed to donate 300,000 to Age UK’s hardship fund.
As quoted by the BBC, E.ON UK’s Customer Service Director, David Bird, said: “We are very sorry to have let down some of our former customers and have made clear that we will refund the money plus interest”.
Ofgem’s Sarah Harrison made clear that measures had been implemented to ensure that suppliers could not exploit the vulnerable position of consumers who sought to switch providers or tariffs to obtain the best rates.
Ms Harrison said: “Ofgem has put in place protections for consumers so they can get a fair warning if their supplier puts up prices and time to shop around for a better deal. E.ON has accepted it failed to meet these protections”.
Audrey Gallacher, of Consumer Focus, added that the development was undoubtedly positive for consumers, as it showed energy suppliers could not bend the rules without facing the consequences, however, she noted that new powers ought to be created to allow Ofgem to enforce direct repayment to consumers. At present, fines imposed by the regulator are paid to the Treasury.
Energy prices are a major cause of concern in the UK. With the exception of E.ON, each of the big six energy suppliers has raised its gas and electricity tariffs ahead of the coming winter. Households can save money on energy bills by installing loft insulation,cavity wall insulation and double glazing and other energy-saving measures.