Major energy firm to pay out millions to customers after rule breaches

It follows a crackdown by the regulator

According to Ofgem, the firm's inadequate oversight of prepayment meter customers included vulnerable households on the priority services register.

As per the watchdog, this led to breaches of rules “designed to protect customers in vulnerable situations – exposing consumers to a clear risk of harm”.

Energy firm Ovo Energy has agreed to a settlement including a £7 million payment to Ofgem’s voluntary redress fund and a £3.4 million package of credit and debt relief for some of its most vulnerable customers.

According to Ofgem, this was in lieu of compensation.

The latest comes just weeks after German rival E.On agreed to buy Ovo in a deal which will create the largest electricity supplier in the UK.

“It is clear that Ovo fell short in its support of vulnerable prepayment meter customers and it’s right that they’ve taken action to improve their processes”, Cathryn Scott, director of market oversight and enforcement for Ofgem said.

“As a result of our investigation, vulnerable customers will receive debt write-off or credit payments alongside a payment into our voluntary redress fund.”

“Prepayment meters are a positive choice for many customers, helping them stay in control of their energy use and reporting high levels of satisfaction – but it’s not suitable for everyone and strong monitoring must be in place to protect vulnerable consumers.”

In the Scottish Highlands and Islands, Ovo is also paying out another £1.1 million to customers, as Ofgem said Ovo failed to offer adequate engineer support to rural households for more than two years.

This happened in the period from January 2022 to April 2024.

In January, Ofgem ordered Ovo to pay £2.77 million in compensation after nearly 12,000 vulnerable customers suffered lengthy delays in getting their warm home discount support.

Of those affected, 7,726 were on the priority services register, which means they were vulnerable customers, and 4,066 of these were classed as medically vulnerable.

The recent development follows a crackdown by the regulator on the prepayment meter market.

Last month, British Gas agreed to a £20 million payout and to compensate customers who had a prepayment meter installed without their permission.

As per Ofgem, rather than the forced installation of meters, the probe into Ovo was opened due to concerns over its processes and treatment of prepayment meter customers.

“Ofgem’s investigation found that Ovo failed consistently to monitor and accurately record customer interactions, with evidence showing that key checks and safeguards were not always carried out”, the regulator said.

“These gaps in oversight risked missing signs of vulnerability, leaving some customers exposed to harm.”

“The regulator also identified issues with staff training materials, which were at times unclear, inconsistent and contained conflicting guidance.”

Its policies and systems have since been strengthened, Ovo said, and these include a new policy to identify and support vulnerable customers.