Scottish Power to pay out £1.5m after overcharging 1,700 households

Scottish Power’s overcharging took place from 2015 to June 2023, with energy prices reaching historically high levels at the end of that period. Photograph: Yui Mok/PA

Scottish Power is to pay £1.5m in refunds and compensation after overcharging nearly 1,700 households at the height of the energy crisis and in previous years, paying out an average of £294 to each customer.

The energy regulator, Ofgem, said it agreed the redress package with the supplier after it confirmed that, between 2015 and 2023, it mistakenly charged 1,699 direct debit customers at a higher rate that should only apply to those who pay when they receive their bill.

The average amount overcharged was £149 a customer. Scottish Power, which has 4.5 million customers overall, has paid £250,000 in refunds to affected customers, plus another £250,000 in goodwill payments – equating to an average of £294 a customer. All payments have been made automatically, and customers do not need to do anything.

The company apologised for the “technical error”. Andrew Ward, the chief executive of its customer business, said: “We’re so sorry that a very small number of our customers were affected by this mistake and faced an increased financial burden – especially during a time when energy prices were reaching an unprecedented high and the government had to step in to provide support.”

Scottish Power has also agreed to pay £1m to Ofgem’s energy industry voluntary redress fund, which gives money to charities and community projects that help vulnerable customers with energy-related support.

Dan Norton, the Ofgem 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.”

Scottish Power reported itself to the regulator last summer, when it discovered that operational errors had led to direct debit customers being charged the standard credit tariff.

This overcharge began in 2015 and continued until June 2023, with energy prices reaching historically high levels at the end of that period.

The energy crisis began with a sharp increase in wholesale gas prices in late 2021 and the situation was exacerbated by Russia’s full-scale invasion of Ukraine in 2022, pushing up household gas and electricity bills and prompting the government to step in and provide additional support.

In determining the redress package, Ofgem said it had considered the additional strain and financial hardship that Scottish Power’s error may have caused customers during this time.

However, had Scottish Power not self-reported and resolved the issues in a “timely manner”, the redress package would have been considerably higher, Ofgem said.