Utilita Energy is to pay out £830,000 after the regulator Ofgem raised concerns over its support of households on prepayment meters.
Ofgem said the energy supplier would hand out compensation to 25,000 of its customers who had been potentially affected, including those with medical issues and those classed as vulnerable.
The energy regulator said Utilita had not taken individual circumstances into consideration when deciding whether or not to provide the necessary additional support credits for customers topping up prepayment meters.
The assessment was based on a review of scripts of employees talking to customers, training materials, procedures, policies and recorded calls with customers.
Customers are expected to receive about £20 each, totalling £508,260, typically as a direct credit on their meter.
Utilita, which has more than 775,000 electricity and 648,000 gas customers, will also pay out £321,740 into the voluntary energy redress fund, which supports energy consumers in vulnerable situations as well as other schemes including carbon emission reducing investments.
Ofgem said that Utilita had agreed to a “financial redress package” instead of a penalty as it had taken steps since the regulator originally highlighted the issue in September.
The regulator’s update comes after it last month told all 17 energy suppliers in its third review into the sector to improve their support for customers, in particular vulnerable ones. It found “severe weaknesses” in five suppliers: Good Energy, Outfox, So Energy, TruEnergy and Utilita.
The treatment of vulnerable energy customers by gas and electricity suppliers has been in the spotlight as temperatures drop and energy consumption increases.
There have been warnings that excess deaths could rise as vulnerable people skimp on heating and those on prepayment meters are missing out on vouchers.
Cathryn Scott, Ofgem’s director for enforcement and emerging issues, said: “Prepayment meters are currently relied on by around 4 million UK households, and the current cost of living issue is placing pressure on many households, which in turn is causing more people to require additional support credits to top-up for their prepayment meters.
“While Utilita has moved swiftly to correct these issues and agreed to compensate those affected, this action should serve as a reminder to other suppliers to go further to ensure vulnerable groups are getting the support they need, particularly during the colder winter months.”
A spokesperson for Utilita said: “While we feel under the circumstances that … Ofgem’s approach was harsh, we have agreed to provide a payment to those customers who were potentially adversely impacted. We welcome Ofgem’s positive acknowledgment of our approach.”
