Ofgem slaps energy supplier with £1m penalty

Hudson Energy Supply UK faces a £1 million financial penalty for violations of standard licence conditions, including failure to treat micro business consumers fairly and billing inaccuracies

Ofgem has finalised its decision to levy a financial penalty of £1 million on Hudson Energy Supply UK Limited (HES) for non compliance with specific standard licence conditions (SLCs) related to its electricity supply license.

The breaches encompassed obligations regarding fair treatment of micro business consumers (MBCs), identification of MBCs, notification of contract terms and billing based on meter readings.

HES admitted to breaching several SLCs, attributing the violations to its arrangement with a third party that acquired customers for HES.

Notably, Hudson Energy Supply UK Limited (HES) underwent a significant shift in ownership when it was acquired by Shell in October 2019.

Following this acquisition, the company underwent a rebranding process in 2020 and is now known as Shell Energy.

According to the energy regulator, the breaches occurred from 2015 to July 2020, with the arrangement concluding in July 2020.

Cathryn Scott, Director of Enforcement and Emerging Issues at Ofgem, said: “As part of our role as the energy regulator, we expect suppliers to comply with their obligations, including where they choose to outsource elements of their business.

“In this case a series of failings by HES has resulted in unacceptable outcomes for energy customers, with a number being unjustifiably overcharged by significant amounts, resulting in serious customer harm.

“Through taking this action Ofgem is sending a firm signal to the market that it is not possible to outsource compliance with the licence conditions: the licence holder is responsible for any breaches and any harm caused to its customers.

“This significant penalty should send a strong signal to all suppliers in the market to act with the utmost care and integrity when it comes to engaging and monitoring third parties carrying out important areas of their supply business on their behalf.

“This is a difficult time for all customers, and poor service and deliberate overcharging will simply not be tolerated.”

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