Energy firm ordered to pay refunds worth £294 after charging more than price cap

Scottish Power said a technical error caused customers to be overcharged

Scottish Power has been ordered to pay £1.5million in refunds and compensation after it charged customers above the price cap during the height of the energy crisis.

Ofgem ordered the compensation package after Scottish Power confirmed that between 2015 and 2023, it overcharged 1,699 direct debit customers a higher rate, which should’ve only applied to those who pay on receipt of bill. Ofgem said the amount overcharged was around £149 per customer.

The energy firm said this was due to a “technical error” which was discovered last year. Overall, Scottish Power has paid a total of £250,000 in direct refunds to affected customers, plus another £250,000 in goodwill payments. This equates to an average of £294 per customer.

The energy supplier, which has five million customers, confirmed that all payments have now been made into the bank account associated with the account. Alongside this ScottishPower has agreed to pay £1million to Ofgem’s Energy Industry Voluntary Redress Fund. This scheme supports charities and community projects that help vulnerable customers.

Dan Norton, Ofgem’s deputy director for price protection, said: “The last few years have been challenging enough for energy customers facing increasing cost of living pressures, without the additional hardship of being overcharged.

“The price cap is there to protect consumers, and we take seriously any breaches of the safeguards we have put in place. Suppliers must be vigilant and act quickly to resolve billing errors that impact customers. We will continue to closely monitors all suppliers and will hold them to account if they do not meet the standards we set.”

The energy firm reported itself to the regulator last year when it discovered the technical error. The error spanned over seven years and continued across 11 price cap periods to June 2023. Ofgem noted that this covered the period when energy bills reached record highs and forced the Government to intervene with it’s Energy price Guarantee.

In making its decision, the energy regulator said it “considered” the additional strain and financial hardship that Scottish Power’s error may have caused customers during this time. However, it added: “While the error is a serious matter, the regulator has taken into account that Scottish Power self-reported the issue and put in place steps to address the failings. Had Scottish Power not self-reported and resolved the issues in a timely manner, the redress package sought would have been considerably higher.”

Andrew Ward, chief executive of Scottish Power’s customer business apologised to affected customers. He said: “Looking after our customers is at the heart of everything we do and our immediate notification to the regulator, swift corrective action and the compensation package agreed with Ofgem show both how seriously we take this matter and our commitment to making it right.” Scottish Power has said it has now put additional controls and monitoring in place to reduce the risk of anything similar happening in the future.