Utilita to pay £500,000 for overcharging its customers

Energy company, Utilita has agreed to pay £500,000 in redress for overcharging its customers.

Utilita overcharged almost 40,000 of its prepayment customers by over £125,000. The company has since refunded customers affected and agreed to pay a further £500,000 in redress.

As a result of the redress, Ofgem has agreed to take no further action after Utilita accepted its shortcomings and the adverse impact on customers, having also self-reported the issue and put in place measures to prevent these issues from reoccurring.

Around 6,600 prepayment customers were overcharged by around £22,700 above the prepayment price cap. Around 33,000 customers were overcharged a total of around £105,000 above the amount they should have paid under their advertised tariff, but below the prepayment cap.

Utilita first self-reported to Ofgem that between May 2019 and September 2019, it had mistakenly overcharged prepayment customers. After opening an investigation, Ofgem found Utilita overcharged around 2,000 gas prepayment customers by £14,000 in total above the level of the prepayment price cap. It also found that between July 2018 and September 2019, Utilita had overcharged around 4,600 electricity prepayment customers by around £8,700 in total above the prepayment price cap.

Additionally, Ofgem found that between July 2018 and September 2019, Utilita overcharged around 33,000 electricity customers more than £105,000 above the amount they should have paid under their advertised tariff, but below the prepayment price cap.

Suppliers cannot charge prepayment meter customers more than the level of the cap, which ensures they pay a fair price for their energy. Ofgem sets the level of the cap and monitors suppliers’ compliance to make sure they do not charge customers more than the level of the cap.

As well as agreeing to pay £500,000 in redress, Utilita has refunded all customers affected in full.

Under the redress package agreed between Ofgem and Utilita, Utilita will make:

• A £10 goodwill payment to all existing customers who were overcharged, increasing to £15 if the customer is on the Priority Services Register. This register ensures appropriate support to customers in vulnerable circumstances.
• A £140 payment to the approximately 900 existing customers affected, who had applied to Utilita for the Warm Home Discount (WHD), but were unsuccessful.
• An additional payment of £45,000 to be paid into Ofgem’s Voluntary Redress Fund (currently administered on Ofgem’s behalf by the Energy Savings Trust).

Ofgem has decided to close the investigation through this alternative action after considering the steps that Utilita took to report the matter, to admit to its shortcomings, to offer redress to those affected, and to put in place measures to stop it from happening again. This decision also reflects Utilita’s willingness to engage positively with Ofgem throughout its investigation.

Cathryn Scott, Director of Enforcement and Emerging Issues, said “Ofgem closely monitors suppliers’ compliance with the price cap, which ensures consumers pay a fair price for their energy. This case sends a message to all suppliers that Ofgem will intervene if they charge customers above the level of the cap or above-advertised tariffs. It also shows that, where appropriate, Ofgem is prepared to work with suppliers who have failed to comply with their obligations, but who have self-reported and are willing put things right quickly.”