Consumer groups have welcomed the agreement between Ofgem and E.ON after the energy supplier failed to abide by the regulator’s rules.
E.ON will be paying shares of £1.4 million to around 94,000 of its customers for overcharging them following price hikes in 2008 and 2011. Consumer Focus and uSwitch.com said this was a “sensible” and “positive” approach.
The energy supplier mistakenly charged exit fees to its customers, which is not permitted if the decision to switch supplier is made within the 30 days’ notice given about price rises.
Audrey Gallacher, Director of Energy at Consumer Focus said it is important to let consumers know energy firms will be penalised for not following rules.
She said: “We welcome Ofgem acting on evidence that fixed-term deal customers lost out when E.ON incorrectly charged termination fees after price rises. Customers need guarantees that energy suppliers play fair on penalty fees and price rises – particularly given the high level of consumer distrust of the energy market.
“Today’s agreement sends a welcome message to the energy industry that not sticking to the rules has repercussions. It is positive that E.ON worked with the regulator to get this money back to customers who lost out, rather than paying a fine which would go back to the Treasury.”
Price comparison site uSwitch.com said it is important consumers know they will be not be charged exit fees if they wish to switch suppliers within the 30 days notice.
Ann Robinson, Director of Consumer Policy at uSwitch.com said: “Today’s announcement also sends a very timely reminder to consumers that if they are unhappy about their supplier increasing its prices they are free to switch to a better deal. Suppliers now have to give you 30 days’ notice and you will not incur exit fees or the higher charges as long as you let your supplier know that you are leaving during this timeframe. With some announced price rises yet to come into effect, consumers can still enjoy this window of opportunity.”
According to Consumer Focus, almost two thirds (62%) of customers aren’t aware of this right.