Scottish Power will pay £1.5 million in reimbursements and penalties after overcharging nearly 1,700 families during the energy crisis and in earlier years, resulting in an average of £294 per customer.
Scottish Power Overcharged Nearly 1,700 Customers, Agrees to Provide Redress Package
Ofgem, the energy regulator, said it agreed to the redress package with the supplier after confirming that, between 2015 and 2023, it incorrectly charged nearly 1700 direct debit consumers at an elevated rate that ought to be limited to those who pay when they get their bills.
The average amount overcharged per consumer was £149. Scottish Power has provided £250,000 in reimbursements to impacted clients, alongside another £250,000 in goodwill payments, for an average of £294 per customer. All of the payments have been issued automatically, and clients are not required to do anything.
The company offered an apology for the “technical error”. Andrew Ward, the CEO of its customer business, stated: “We’re so sorry that a very small number of our customers were affected by this mistake and faced an increased financial burden – especially during a time when energy prices were reaching an unprecedented high and the government had to step in to provide support.”
Additionally, Scottish Power is willing to give £1 million in contribution to Ofgem's energy industry voluntary redress fund, which provides funding to community-based organisations and charities that assist disadvantaged consumers with energy-related assistance.
Dan Norton, the Ofgem deputy director for price protection, declared: “The last few years have been challenging enough for energy customers facing increasing cost of living pressures, without the additional hardship of being overcharged. The price cap is there to protect consumers, and we take seriously any breaches of the safeguards we have put in place.
“Suppliers must be vigilant and act quickly to resolve billing errors that impact customers. We will continue to closely monitors all suppliers and will hold them to account if they do not meet the standards we set.”
Scottish Power's Direct Debit Error Overcharged Customers During Energy Crisis
Scottish Power notified the regulator last summer when it noticed that operational issues had resulted in direct debit customers being charged the normal credit tariff.
This overcharge started in 2015 and lasted until June 2023, with energy costs hitting record high levels at the end of that time.
The energy crisis began with an unexpected rise in wholesale gas prices in late 2021, and it was exacerbated by Russia's full-fledged invasion of Ukraine in 2022, which raised home gas and power bills and prompted the government to intervene and give more assistance.
Ofgem stated that when assessing the redress package, it took into account the additional pressure and financial hardship that Scottish Power's error may have affected customers during this period.
However, Ofgem stated that if Scottish Power had not self-reported and remedied the faults in a “timely manner,” the compensation package would have been much higher.