Energy firm E.ON Next is to pay £14.5 million in compensation and redress to customers on prepayment meters.
The industry watchdog Ofgem has announced that around 100,000 will receive £144 each and another 150,000 will have their energy debt written off.
It said the company was guilty of failing to provide final bills and refund customer credit balances to prepayment meter customers.
An investigation found almost 250,000 prepayment meter customer accounts were affected between February 2021 and September 2023 due to an error within its billing system, which E.ON Next self-reported to Ofgem.
As a result of the issue, prepayment customers who transferred to another supplier or terminated their contract did not receive final bills within six weeks, as required under Ofgem’s rules. E.ON Next also subsequently failed to make compensation payments of £30 or £60 as required under the Supplier Guaranteed Standards of Performance (GSoP).
Because they did not receive a final bill, affected customers were also unaware of the credit remaining on their accounts, worth £51 on average, and were not provided a refund automatically.
Ofgem said that as a result of these failures, and in recognition of the impact on its customers, many of whom may have faced financial difficulty, the company has agreed to pay a total of £14.5million in compensation and redress payments, with each customer account receiving on average £144.
The payment includes £4.7million in credit refunds, £6.6million in compensation payments, and an additional £3.2million in compensation to affected customers.
Where it has not been possible to trace a customer, E.ON Next has agreed to make additional payments to the Energy Industry Voluntary Redress Fund, which funds projects and schemes to support energy consumers, particularly those in vulnerable situations.
In addition to the compensation and redress package, E.ON Next has also agreed to voluntarily write off debt held by almost 150,000 prepayment meter customers who closed their accounts with the supplier between February 2021 and September 2023.
All affected accounts who were able to be identified have been contacted by E.ON Next, and the company has since updated its billing systems and processes to resolve the issue, and ensure final bills are sent to prepayment meter customers.
Beth Martin, director for consumer protection and competition at Ofgem, said: “Prepayment meter customers are more likely to face financial difficulties, and during a period where households have been facing a significant cost of living crisis, it’s unacceptable that consumers did not receive refunds for credit that was owed to them, or final bills they are entitled to.
“E.ON Next has demonstrated an understanding of the significant impact this issue may have had on its customers, and 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. The action to write off debt will also offer affected households peace of mind.
“We are committed to driving up standards in the retail market so each and every customer gets the service they deserve from their energy company. If we see companies failing to act in the interest of their customers, we can and will take action.”
