E.On To Pay Additional £7m For Overcharging

E.On, one of the UK's 'Big Six' energy suppliers, is to pay an additional fine of more than £7m for overcharging its customers.

The company will have to pay a penalty of £7.75m after incorrectly charging exit fees and/or overcharged its customers, following price increases. The fine is in addition to £400,000 E.On has already paid back to potentially affected customers.

Ofgem, the energy regulator, has said the energy supplier is in the process of refunding remaining customers to ensure they did not lose out financially.

Under Ofgem rules, suppliers have to give customers 30 days' notice of a price rise; as this allows customers a chance to switch before the increase takes effect. If a customer signals their intention to move supplier within this time period, they do not incur exit fees or the higher charge, even if the switch occurs after the price rise.

However, E.On was found to have made billing errors in respect of price rises in January 2013 and January 2014, affecting direct debit and standard credit customers. The average amount paid back was around £8 and £12 respectively. E.ON has made refunds to around 40,000 customers, but the number of those thought to have been affected by the issue is likely to be less.

These rules also apply to prepayment customers, but Ofgem said information highlighting that these customers were also affected was only provided very late into the investigation. As a result, the error resulted in around 500 prepayment customers for the January 2013 price increase and around 6,500 prepayment customers for the January 2014 price increase missing out on average a refund of £3.42.

E.On has said it will find the customers to provide refunds by the end of April.

Taking this into account when determining the level of the penalty imposed, Ofgem referred to the supplier as having made the same error previously, as well as making senior-level commitments that it rectified its processes. Also taken into account, was that E.On notified Ofgem of the billing issues and has cooperated throughout the investigation.

Sarah Harrison, Ofgem's senior partner in charge of enforcement, said: " Ofgem's rules give customers a chance to avoid exit fees and higher costs when suppliers put up prices. These are important customer protections and it is vital that suppliers play by the rules so customers are encouraged to engage in the market.

"E.On's errors meant customers who took the chance to switch were wrongly charged. It is important that E.ON has repaid potentially affected customers and cooperated with the investigation.

"However it's absolutely unacceptable that E.ON failed to provide these vital customer protections yet again and this persistent failure is the reason for the high penalty."

In a statement, E.On said it "sincerely apologises to those affected" and has agreed to make a payment to Citizens Advice which will be used to support its Energy Best Deal Extra engagement programme, which provides face-to-face energy advice.

The company added: "E.On is committed to ensuring that no one will lose out financially and is pleased that the payment is going to a worthwhile cause that will provide support to those in need."

(JP/MH)