Utilita to Pay £500k for Overcharging Customers

Challenger energy supplier Utilita will pay £500,000 in redress after an investigation revealed it had overcharged 40,000 prepayment customers.

Utilita, which specialises in pay-as-you-go energy, self-reported to Ofgem last year that it had mistakenly been overcharging customers. The regulator launched an investigation, which revealed the supplier had charged 6,600 customers a total of £27,000 more than permitted under the prepayment price cap.

This includes 2,000 gas prepayment customers overcharged by a collective £14,000 and 4,600 electricity prepayment customers overcharged by a cumulative £8,700. The offences occurred between July 2018 and September 2019.

The cap, introduced in April 2017, limits the amount suppliers can charge the four million households with prepayment gas and electricity meters. It will be merged with the price cap on standard variable tariffs from January and run at least until the end of 2021.

The Ofgem investigation, first announced in January, also revealed that between July 2018 and September 2019, Utilita charged 33,000 other prepayment customers a total of £105,000 more than they should have paid under their advertised tariff, although below the level of the price cap.

Utilita has since refunded all customers who were overcharged and agreed a redress package with the regulator.

As part of the package, 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, identifying them as vulnerable and in need of extra support.

It will also make a £140 payment to 900 existing customers who applied to Utilita for a Warm Home Discount (WHD) but were unsuccessful. The WHD is a £140 rebate on electricity bills, given to pensioners and other vulnerable people to defray their winter fuel costs.

Utilita will also make a £45,000 payment into the Voluntary Redress Fund, which supports households in fuel poverty and the development of innovative energy products and services and is administered for Ofgem by the Energy Savings Trust.

Ofgem is now closing the investigation into Utilita, given the steps it took to report the issues, offer redress to affected customers and put in place measures to stop it from happening again.

Cathryn Scott, Director of Enforcement and Emerging Issues at Ofgem, 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.”

Utilita, which serves around 800,000 households, is the second supplier to be dinged by Ofgem for customer service failings recently. Last week the regulator announced iSupply, which has been purchased by EDF, has paid more than £500,000 in refunds, goodwill payments and redress after incorrectly blocking nearly 23,000 customer switches.