Fast-growing supplier Ovo Energy is set to pay out £8.9 million to the industry regulator after it found that some customers were overcharged and provided with inaccurate information.
Ofgem said Ovo has agreed to pay the “voluntary redress” after some customers were undercharged or overcharged due to problems on its IT systems.
The regulator said the green energy supplier also sent inaccurate annual statements to more than 500,000 customers between July 2015 and February 2018.
Customers were also charged incorrectly, with some overpaying and others underpaying, after the supplier under-estimated consumption levels over one winter, Ofgem said.
The investigation also revealed that failings in Ovo’s IT systems and compliance processes meant that around 10,000 customers were not given statements of renewal terms when tariffs were ending or moved to new tariffs when their existing tariff ended.
Around 8,000 customers also paid above the level of the prepayment meter cap after Ovo failed to move them on to a new tariff after their previous one ended.
Meanwhile, 17,500 prepayment meter customers were not initially charged at the correct regional level of the prepayment meter cap.
Ofgem said Ovo “did not self-report the majority of the issues despite being aware of them” and was “slow” to correct the issues.
Ovo now accepts and has corrected the breaches, including refunding its overcharged customers.
It has also written off all amounts related to customers who had been charged at the wrong rates.
Anthony Pygram, director of conduct and enforcement at Ofgem, said Ovo “did not prioritise” fixing these issues for customers while its business was expanding.
He said: “Ovo Energy billed a number of its customers incorrectly and issued them with inaccurate information.
“Our enforcement action sends a strong message that suppliers must get basic services right for all their customers.
“Ovo Energy has accepted the breaches and put processes in place to comply with the rules in future.”
In a statement, Ovo said: “Ovo Energy holds itself to high standards, but we have not always got it right.
“We accept Ofgem’s findings of issues regarding estimation processes, information formatting and pricing errors.”
Ofgem has also forced fellow supplier Utility Warehouse to pay out £650,00 after it overcharged customers due to a systems error.
The regulator said Utility Warehouse will refund £450,000 to 3,430 customers of its Warm Home Discount who were overcharged after the recent energy price cap was applied.
Ofgem said the supplier will also pay a further £200,000 into the watchdog’s voluntary redress fund due to the “seriousness of the breach and the impact on potentially vulnerable customers”.