Company agrees to make a £7.75m payment to Citizens Advice following charging error;
- All money continues to be fully repaid to customers and no action is needed on their part;
- Around 48,000(1) potentially affected customers have either received or are due to receive a redress payment. In the majority of cases this payment is less than £10.
E.ON has today (THURS) provided a £7.75m payment to Citizens Advice after incorrectly applying increases in price and termination fees to some former customers who expressed their wish to leave the company after price rise announcements in 2013 and 2014(2).
As set out in the penalty notice published today it has been made clear that Ofgem issued an open letter in March 2014 setting out its intention to place a greater emphasis on deterrence when imposing penalties for future breaches and that this is likely to mean a substantial increase in the level of penalties imposed. This applies where evidence of rule breaking comes to Ofgem’s attention on or after 1 June 2014 and Ofgem took this into account when examining the January 2014 breach.
Following reports from E.ON, Ofgem opened an investigation into the errors in June 2014 and has agreed today’s penalty package in recognition of the company’s errors. These errors meant that some customers were overcharged although in the majority of cases this was by less than £10.
E.ON has identified potentially affected customers and is continuing to automatically provide redress payments to ensure no-one loses out financially.
Although the underlying reasons are different, this is not the first time that E.ON has made this error(3) and the company sincerely apologises to those affected. E.ON has agreed with Ofgem to carry out an independent external audit relating to the specific breaches and to implement any appropriate recommendations.
E.ON has been open and transparent about this failure to Ofgem and has agreed to make a payment to Citizens Advice which will be used to support its Energy Best Deal Extra engagement programme, which provides face to face energy advice.
E.ON is committed to ensuring that no one will lose out financially and is pleased that the payment is going to a worthwhile cause that will provide support to those in need.
For more media information contact:
Scott Somerville (07889 771 804)
Victoria Blake (02476 181 304)
Roxanne Postle (02476 195 785)
Notes to Editors
1 = E.ON has identified customers potentially affected by the systems error and to ensure no delays or that any customer misses out it has or will provide a redress payment to those potentially affected. i.e. the number actually affected by this error will be less.
2 = If a customer switches to another supplier following a price rise announcement, no increase in price should be applied to their accounts if the switch is fully completed. E.ON’s processes resulted in this rule not being applied consistently and many leaving customers were charged the new, higher price, on the days that the switch was still passing through the system.
3 = 27/11/14 – “E.ON says sorry to 94,000 former customers”
On the 27th November 2012 it was announced by E.ON that following mistakes made in 2008 and 2011, when applying price increases, it would make a donation of approximately £300,000 to the Age UK Engage Fund to ensure that once redress payments of an average £14.83 were made to 94,000 former customers the overall programme totalled at least £1.7m.
Full media statement: http://pressreleases.eon-uk.com/blogs/eonukpressreleases/archive/2012/11/27/1893.aspx