Utilita pay £500,000 compensation for overcharging customers

The breaches took place between July 2018 and September 2019, causing customers to overpay on their energy by more than £125,000.

This money has already been refunded, but now Utilita have agreed to pay a compensation package to all customers and pay into Ofgem's Voluntary Redress Fund.

No further action will be taken against by Ofgem against Utilita as they self-reported the issue and have engaged positively throughout the regulator's investigation.

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Prepayment failings

In total, nearly 40,000 of Utilita's prepayment meter customers were affected by failings spanning from July 2018 through to September 2019.

This was made up of:

• Around 2,000 gas prepayment meter customers charged a total of £14,000 above the level of the prepayment price cap
• Around 4,600 electricity prepayment customers charged a total of £8,700 above the level of the prepayment price cap
• Around 33,000 electricity customers were charged a total of £105,000 above the amount they should have paid under their advertised tariff

All customers have been refunded in full and Utilita have agreed to the following:

• A £10 goodwill payment to all existing customers who were overcharged, increasing to £15 for those on the Priority Services Register
• A £140 payment to around 900 existing customers who applied for the Warm Home Discount (WHD) but were unsuccessful
• A payment of £45,000 to Ofgem's Voluntary Redress Fund

Thanks to these compensation and redress commitments, Ofgem have agreed to take no further action.

Another breach

This isn't the first time Utilita have been in trouble with Ofgem - they paid £175,000 to the voluntary fund in August 2019 because of energy efficiency failings.

Ofgem found customers missed out on up £30,000 of savings between 2015 and 2018, with Utilita blaming a lack of effective internal monitoring which meant they over-delivered on some elements of their obligations while under-delivering on others.

The provider also struggled with technical issues when the prepayment cap was first introduced, overcharging around 348,000 customers a total of £3.54m.

In 2015, they paid £450,000 to debt charity StepChange after wrongly blocking 40,000 customers from switching to another energy supplier between June 2010 and May 2015.

Utilita currently have a 2.61% share of the electricity market in the UK and a 2.65% of the gas market.

Protecting vulnerable customers

Utilita's failings on prepayment meters affected some of the most vulnerable energy customers, and the level of redress reflects how serious this could have been for those customers involved.

Problems impacting vulnerable customers are a common theme in Ofgem's recent compliance investigations.

In August, Bulb paid redress for three separate issues affecting 61,000 customers in total across a three-year period. This included removing 46,500 customers from their internal Priority Services Register which is meant to highlight vulnerable customers needing additional support from their energy provider.

Also in August, British Gas agreed to pay £1.48m in compensation plus £250,000 into the voluntary redress fund after failing to properly notify customers of a switch to another prepayment top-up provider.

Any energy customers who feel they have been adversely affected by their provider's actions should read our guide on how to complain about an energy supplier. We also have a full explanation of your rights as an energy customer.