Ofgem Investigating Utilita Energy for Overcharging Prepayment Customers

Ofgem has launched an investigation to determine whether energy supplier Utilita breached a price cap and overcharged prepayment meter customers last year. 

The energy market regulator will determine whether Utilita customers’ bills between May and September 2019 exceeded the level allowed by the price cap for prepayment tariffs. The cap was at set at £1,242 per year during the period Utilita is alleged to have breached it. It’s currently £1,217 for a dual fuel household with typical use

Ofgem said: “The opening of this investigation does not imply that we have made any findings about non-compliance by Utilita.”

A spokesperson for Utilita said: “We are aware Ofgem has opened an investigation and will assist the regulator in every way we can.”

Utilita supplies around 780,000 customers. In September, it was appointed by Ofgem as the supplier of last resort (SoLR) following the collapse of small supplier Eversmart Energy and received 29,000 domestic and a small number of business accounts. Utilita also received 31,000 customers through the SoLR process for Our Power, the Scottish government-backed non-profit supplier which collapsed in January 2019.

However, in July, Utilita paid £175,000 into the energy redress fund after failing to meet its carbon reduction obligations under the Energy Company Obligation (ECO) scheme between 2015 and 2018. Under the ECO, large and medium energy suppliers must assist vulnerable energy consumers in keeping their homes warm and reducing their fuel consumption and greenhouse gas emissions. This help takes the form of financial assistance for energy efficiency upgrades.

The prepayment price cap, which was introduced in April 2017 and is adjusted biannually, is scheduled to run until the end of 2020, although the Competitions and Markets Authority (CMA) has suggested that it be extended beyond that date to protect prepayment customers, who are disproportionately vulnerable and less likely to switch supplier.

Last year, auto-switching service Switchcraft estimated that even with the price cap the four million customers with prepayment meters pay up to £378 more for their gas and electricity than those on credit tariffs. That translated into a collective overspend of £1.5 billion on energy bills a year.

Ofgem has said the price cap is doing enough to protect those customers: “The price cap ensures that consumers remain protected from being overcharged for their energy and that any increases in the level are only due to actual rises in energy costs, rather than excess charges from supplier profiteering.

“The cap has significantly reduced consumers’ bills. Our analysis suggests that on average consumers are paying less than they would be if the cap was not in place. Households who use more energy, such as large families, are saving even more.”