Thousands Overcharged on Energy Bills Due to Metering Error
Tens of thousands of households across the UK have been unknowingly overcharged on their energy bills for years due to a widespread metering blunder, the energy regulator Ofgem revealed today. An estimated 34,000 customers with multiple electricity meters at their properties were wrongly charged inflated standing charges between 2019 and 2024, resulting in a collective overpayment of millions of pounds. This issue, stemming from miscalculations by ten different energy suppliers, has prompted a significant refund and compensation effort, totaling £7 million, and a call for stricter billing practices across the industry.
The overcharging occurred between 2019 and 2024 and affected approximately 34,000 energy customers with multiple electricity meters at their properties. While suppliers are permitted to apply multiple standing charges for homes with more than one meter, Ofgem found that some companies "erroneously charged more than is allowed under the price cap when combined with unit rates."
Ofgem's investigation led to ten suppliers agreeing to issue a combined £7 million in refunds and goodwill payments. This £7 million comprises £5.6 million in direct refunds and nearly £1.4 million in additional goodwill payments to affected customers. Octopus Energy had the largest number of affected customers, with 20,862 accounts requiring refunds totaling £2.6 million. Other suppliers involved included Eon Next, Ecotricity, EDF, Outfox the Market, Ovo Energy, Rebel Energy, So Energy, Tru Energy, and Utility Warehouse.
Ofgem confirmed that affected customers should be refunded automatically. Those who have switched suppliers will be contacted by their previous provider to arrange reimbursement. Refunds will even be issued to customers of the now-defunct Rebel Energy.
Standing Charge Error: The overcharging stemmed from a miscalculation of standing charges applied to customers with Restricted Meter Infrastructure (RMI). These properties have multiple electricity meter points, allowing suppliers to levy multiple standing charges. However, several suppliers failed to adequately account for the combined impact of these multiple standing charges alongside the unit rate for energy consumed. This oversight resulted in charges exceeding the allowable limit set by the price cap for some RMI customers.
In essence, while applying multiple standing charges is permissible, the suppliers neglected to ensure the total charge, inclusive of both standing charges and unit rates, remained within the price cap parameters. This oversight contravened Ofgem's regulations, which explicitly mandate suppliers to vigilantly monitor charges to prevent overcharging due to the application of multiple standing charges. Ofgem's price cap is designed to protect consumers from excessive energy costs, and the suppliers' miscalculation directly undermined this protection.
As a result of this error relating to multiple meter points at customer properties, ten energy suppliers have collectively returned approximately £7 million to over 30,000 affected customers. The refunds and compensation payments have been disbursed to more than 34,000 impacted accounts, as confirmed by industry regulator Ofgem.
Among those affected, Octopus Energy, the UK's largest supplier, led the reimbursements, returning £2.64 million in refunds and an additional £546,278 as a goodwill payment to over 20,000 customers. Utility Warehouse also issued substantial refunds exceeding £2 million to over 8,000 customers. Other suppliers involved included Ovo Energy, So Energy, Outfox The Market, Ecotricity, E.On Next, Tru Energy, Rebel Energy, and EDF Energy.
Ofgem played a crucial role in uncovering this overcharging issue, which affected more than 34,000 customers with multiple electricity meters. The regulator's investigation revealed that between 2019 and 2024, ten suppliers erroneously charged these customers more than permitted under the price cap when combined with unit rates. Ofgem's intervention led to the suppliers agreeing to issue a total of £7 million in refunds and goodwill payments.
Ofgem director of retail pricing and systems, Charlotte Friel, emphasized the regulator's expectation that suppliers maintain robust billing processes. While acknowledging the errors, Friel highlighted the prompt resolution and the initiation of customer refunds. She underscored Ofgem's commitment to ensuring suppliers implement the price cap correctly and conduct thorough due diligence.
This action reinforces Ofgem's role in protecting consumers and enforcing compliance within the energy market. Friel stated that Ofgem is prepared to work with suppliers who fail to comply with regulations, demonstrating their commitment to holding energy companies accountable and ensuring fair pricing practices for all customers.
Call for Improved Billing Systems: Following the discovery of these overcharging errors related to standing charges affecting over 34,000 customers, Ofgem has issued a stern reminder to energy suppliers regarding the necessity of robust and accurate billing processes. The regulator emphasized its commitment to consumer protection and the importance of adhering to the price cap.
Ofgem Director Charlotte Friel stressed that suppliers are expected to implement systems that ensure accurate billing and prevent a recurrence of these errors. While acknowledging that mistakes can occur, Friel highlighted the need for proactive measures to safeguard consumers from undue financial burdens. The regulator's intervention underscores its dedication to holding suppliers accountable for upholding and correctly implementing the price cap.
This incident serves as a clear directive for energy companies to review and strengthen their billing systems. The expectation is not merely to rectify existing errors, but to proactively prevent future issues by investing in more robust and reliable billing infrastructure. Ofgem's message is clear: consumer protection is paramount, and suppliers must prioritize accurate billing practices to maintain compliance and avoid penalties.
Ultimately, the resolution of this overcharging debacle underscores the critical need for robust and transparent billing practices within the energy sector. While the £7 million in refunds and compensation offers some redress to the 34,000 affected customers, the incident highlights systemic vulnerabilities that allowed such errors to persist for five years. Ofgem's intervention and subsequent demand for improved billing systems serves as a crucial step towards protecting consumers and ensuring accurate energy pricing. The regulator's continued vigilance, coupled with an industry-wide commitment to upgrading systems, will be paramount in preventing similar overcharging incidents and maintaining public trust in the energy market.
