Ovo to Pay £8.9 Million for Inaccurately Billing Customers

Ovo Energy inaccurately billed half a million households over three years as it focused on expansion over customer service, energy market Ofgem watchdog has revealed.

Ovo, which recently became the UK’s second largest energy supplier with the £500 million acquisition of SSE’s retail supply arm, will pay £8.9 million into a voluntary redress fund for the failings.

The regulator discovered that due to failures in Ovo’s IT systems and compliance processes between July 2015 and February 2018, more than 500,000 customers received inaccurate annual statements from Ovo, while other customers didn’t receive annual statements at all.

An additional 10,000 customers didn’t receive statements showing their renewal terms when their tariffs ended or weren’t moved onto new tariffs when their existing deal expired.

Ovo also applied the price cap for pre-payment energy customers incorrectly, either over- or undercharging 17,500 customers based on their region. Another 8,000 customers with pre-payment meters paid more than allowed under the Safeguard price cap when they weren’t moved to new tariffs when their existing tariffs ended.

An unknown number of customers were either over- or undercharged due to Ovo underestimating their winter energy consumption.

Ofgem sharply criticised Ovo for the failings, which it claims the company knowingly ignored as it focused on expansion. Ovo didn’t self-report the errors to Ofgem, as required, and was slow to fix them.

Anthony Pygram, director for conduct and enforcement at Ofgem, said: “Ovo Energy billed a number of its customers incorrectly and issued them with inaccurate information. The supplier did not prioritise putting these issues right while its business was expanding.”

Ovo has already refunded pre-payment customers overcharged under the price cap and has written off the amounts owed by other customers incorrectly billed. Now the supplier will pay £8.9 million into Ofgem’s voluntary redress fund, which supports vulnerable energy customers.

“Our enforcement action sends a strong message that suppliers must get basic services right for all their customers,” Pygram said. “Ovo Energy has accepted the breaches and put processes in place to comply with the rules in future.”

Ovo accepted the failures but defended its customer service record.

"Ovo Energy holds itself to high standards, but we have not always got it right. We accept Ofgem’s findings of issues regarding estimation processes, information formatting and pricing errors,” a spokesperson said.

"Since the day we were founded, serving our customers has been our number one priority. We strive to give them the best experience by working hard to provide the latest digital innovations and excellent service. We have pioneered a new business model for the industry and have constantly innovated to simplify energy for our customers.”

Ofgem also found that rival supplier Utility Warehouse charged 3,430 customers more than allowed under the price cap. The supplier self-reported the issue to Ofgem and refunded the £150,000 overcharged and compensated customers with an extra £300,000. It will now also pay £200,000 into the voluntary redress fund.

Ofgem decided against taking formal enforcement action against Utility Warehouse or ordering a larger payment because of the steps Utility Warehouse took to report and quickly address the failings.