In a damning indictment of their billing practices, leading energy supplier E.ON Next has been ordered by regulator Ofgem to pay out a staggering £14.5 million in compensation to nearly a quarter of a million of their most vulnerable prepayment customers. The extraordinary mandate comes after an extensive 18-month investigation uncovered unacceptable failures in the company’s processes that left scores of households out of pocket and in the dark.
Systemic Billing Errors Impact Those Most in Need
The heart of the issue lies in E.ON Next’s billing system, which Ofgem’s probe discovered was riddled with errors between early 2021 and late 2022. These faults led to a cascade of financial challenges for approximately 250,000 prepayment customers, many of whom were already grappling with the escalating cost of living crisis.
Shockingly, the investigation revealed that when these customers either switched to another supplier or terminated their contract altogether, E.ON Next repeatedly failed to provide final bills within the mandated six-week timeframe. This left households in the precarious position of not knowing how much credit remained on their accounts or if they were owed refunds.
It’s unacceptable that consumers did not receive refunds for credit that was owed to them, or final bills they are entitled to.
– Beth Martin, Director for Consumer Protection and Competition at Ofgem
Compounding the Financial Burden
On average, affected customers had £51 in credit remaining on their closed accounts, money that could have made a significant difference to those struggling to make ends meet. To add insult to injury, E.ON Next then neglected to pay out the required £30 to £60 in compensation for each late final bill, further compounding the financial burden on these households.
In total, the energy giant has agreed to pay out:
- £4.7 million in credit refunds
- £6.6 million in overdue statutory compensation payments
- £3.2 million in additional compensation
This amounts to an average payout of £144 per affected customer, a sum that will undoubtedly be welcomed by those impacted but that hardly seems adequate given the scale and duration of the billing failures.
A Disturbing Pattern of Poor Customer Service
Sadly, this is not the first time E.ON Next has been in the regulatory crosshairs for letting down their customers. Just last year, Ofgem ordered the firm to pay £5 million in compensation after an audit uncovered severe weaknesses in their customer service that left callers waiting for unacceptable lengths of time and far too many calls going unanswered entirely.
While E.ON Next has pledged to write off the outstanding debts of the nearly 150,000 impacted prepayment customers who closed their accounts during the period under investigation, it remains to be seen whether this gesture will be enough to restore faith in a company with a troubling track record of letting down those most in need of support.
E.ON Next has demonstrated an understanding of the significant impact this issue may have had on its customers. It’s encouraging that they self-reported the issue and have worked with us to resolve it, and compensate affected customers to put things right.
– Beth Martin, Director for Consumer Protection and Competition at Ofgem
A Wake-Up Call for the Industry
The scale of this payout and the systemic nature of the failures uncovered should serve as a stark wake-up call to the entire energy sector. In a time of unprecedented financial pressures on households, it is simply unacceptable for suppliers to let vulnerable customers slip through the cracks due to avoidable billing errors and substandard service.
Prepayment meter customers, who are disproportionately likely to be on low incomes or facing other challenges, deserve better. They need to have confidence that their supplier will bill them accurately, promptly return any credit owed, and be there to support them when needed.
While E.ON Next’s agreement to compensate those impacted is a step in the right direction, the real test will be whether they, and the industry as a whole, can learn from these failures and put in place robust processes to ensure they are not repeated. Only then will the most vulnerable in our society be able to have faith that their energy supplier has their back.
