Utilita Energy (Utilita) has agreed to pay out £830,000 after Ofgem determined the supplier was not taking individual circumstances into consideration when deciding whether to provide additional support credits for customers topping up prepayment meters.
The watchdog’s assessment was based on a review of scripts of employees talking to customers, training materials, procedures, policies and recorded calls with customers.
It forecasts that over 25,000 customers were potentially affected, including those with medical issues and customers classed as vulnerable.
Utilita was first issued with a provisional order related to this issue in September, which lapsed last week after the firm took steps to secure compliance.
The energy firm has now agreed to pay the financial redress package instead of a penalty.
Of the £830,000, the sum will be split between the £20 paid to all those customers who were potentially affected by the issue totalling £508,260, and Utilita making a contribution to the Voluntary Redress Fund totalling £321,740.
The fund is designed to support vulnerable consumers with their energy, as well as invest in innovation projects and carbon emission reductions.
Utilita currently serves over 775,000 electricity and 648,000 gas customers, and those affected included customers in vulnerable situations and with medical conditions.
Cathryn Scott, Ofgem’s director for enforcement and emerging issues, said: “As the energy regulator, protecting consumers is our top priority, and we have strong expectations that energy suppliers must take the individual circumstances of consumers, particularly those who in vulnerable situations, into consideration.
“This action also forms part of the wider work Ofgem is doing to ensure suppliers are delivering for consumers via a series of market-wide reports deep diving into supplier policies, governance, procedures and practices, which have highlighted where urgent improvements are needed.”
When approached for comment, a Utilita spokesperson said: “During the period in question, we provided at least 1.7m interest-free loans – worth a total of £31m – to customers who, temporarily, could not afford to top-up their prepayment meters and hence asked us for money. We were able to help the vast majority.
“Ofgem has concluded that Utilita potentially did not take individual circumstances into consideration when refusing to provide a further 25,000 customer loans – a minute percentage of the total provided – over the same period.
“We have led the way with Additional Support Credit – even allowing our customers to quickly self-serve the support they need – since launching the service in 2015. However, we feel that the licence provisions on Additional Support Credit, introduced in December 2020, do lack clarity.
“While we feel under the circumstances that the Provisional Order and Ofgem approach was harsh, we have agreed to provide a payment to those customers who were potentially adversely impacted.”