E.ON fined £7.7m for overcharging customers

Energy supplier E.ON has been fined £7.75m by energy regulator Ofgem for overcharging customers when it put prices up or charging them fees to switch to other suppliers.

E.ON must pay £400,000 to 40,000 customers and could have to make payments to another 7,000 before the end of this month. Average compensation so far has been £10 a customer.

The firm was fined £12m last year for mis-selling and £1.7 million in 2012 for the same kind of offences as today.

Ofgem said its fine reflected the fact this was a repeat offence and executives had previously committed to putting the problem right.

Sarah Harrison, head of enforcement at Ofgem, said: “E.ON’s errors meant customers who took the chance to switch were wrongly charged. E.ON has repaid potentially affected customers and co-operated with the investigation. However, it’s unacceptable that it failed to provide these vital customer protections yet again.”

The fine will be given to Citizens Advice to help vulnerable consumers.

“This ruling will send out a strong message to the whole industry that consumer rights cannot be ignored,” said Gillian Guy, the chief executive of Citizens Advice.

E.ON, which is headquartered in Germany, said yesterday that it “sincerely apologises” to those affected by its billing errors.

Ofgem’s rules require suppliers to give customers 30 days’ notice of a price rise. This allows customers a chance to switch before the increase takes effect. If a customer signals their intention to move supplier within the 30 days, they should not incur exit fees or the higher charge — even if the switch occurs after the price rise.

E.ON’s billing errors related to price rises in January 2013 and January 2014. Some 500 prepayment customers for the January 2013 price increase and around 6,500 prepayment customers for the January 2014 price increase missed out, on average, for a refund of £3.42.

Amid public outcry over rising energy bills, the Labour leader, Ed Miliband, pledged in 2013 to freeze gas and electricity bills for every home and business in the UK for 20 months if his party wins the election. However, energy prices are now coming down as a result of the collapse in the global oil price.

Yet Labour has redoubled its fire on the big six energy suppliers, pledging last month to force utilities to pass on falling energy costs to consumers by the end of the year.

“We will reset this broken energy market for the long term,” Mr Miliband said.