Ofgem closes compliance engagement with Opus Energy in relation to overcharging of customers
Decision
- Publication date
- Company
- Opus Energy Limited
- Industry sector
- Supply and Retail Market
- Generation and Wholesale Market
- Licence type
- Gas Shipper Licence
- Gas Supplier Licence
- Electricity Supply Licence
Summary
Ofgem has recently concluded compliance engagement with Opus Energy on its compliance with Standard Licence Conditions 0A on treating non-domestic consumers fairly, Standard Licence Condition 4A on operational capability, and Standard Licence Condition 21B on billing based on meter readings.
The compliance issue related to errors on non-domestic customers’ bills that occurred between 2003 and 2023. Opus Energy self-reported to Ofgem that it had overcharged 87,825 non-domestic customer accounts due to a technical fault in its billing system.
Opus Energy has collaborated in this matter and has taken proactive steps to ensure the technical fault was fully resolved on 18 April 2024. Opus Energy will pay an overall package of £7,077,077 comprised of refunds and goodwill payments that will ensure a positive outcome for consumers. Additionally, Opus Energy will make a payment into the Energy Industry Voluntary Redress Scheme (EIVRS).
Ofgem and Opus Energy have agreed a compensation strategy to ensure customers receive the expected refunds and compensation. Ofgem will also monitor the implementation of the action plan up to its completion in June 2025.
Compliance engagement outcome
Opus Energy self-reported to Ofgem in December 2023 that it had not provided some non-domestic consumers with accurate billing during the period of 2003 and 2023. This was due to two separate faults in its billing systems which meant that an incorrect tariff was applied to billing for certain periods of time, and that some billing periods were duplicated. Of those affected, 93% were impacted by less than £50 in total.
Under Standard Licence Condition 0A, suppliers must ensure that each non-domestic consumer is treated fairly (“the Customer Objective”), and it achieves the Standards of Conduct in a manner consistent with the Customer Objective. Opus Energy did not meet this requirement because customers were overcharged for their energy usage as a result of the identified system faults.
Standard Licence Condition 4A requires suppliers to have and maintain robust internal capability, systems and processes. Opus Energy did not meet this requirement due to the lack of sufficient controls to its billing system leading to its customers being overcharged.
Standard Licence Condition 21B requires that the supplier takes all reasonable steps to reflect the meter reading in the next bill or statement of account sent to the customer. This condition was not met by Opus Energy because the customers affected by the system faults did not receive accurate bills.
Opus Energy implemented a number of temporary fixes to the system upon detection of the fault, and as of 18 April 2024 put in place a comprehensive fix to its billing system. Additionally, Opus Energy has taken proactive steps and has so far refunded £2 million of the money due to 14,731 affected customers.
Following a collaborative engagement, Opus Energy and Ofgem have successfully agreed a comprehensive action plan to resolve this issue for affected customers:
- Opus Energy will reimburse affected customers a total of £3,914,531 to reflect the value of overpayments from 2003 to 2023
- Opus Energy will provide customers with an additional payment of £1,597,058 to reflect the inflation uplift based on the Retail Price Index (RPI) on the refunds since individual errors occurred
- Opus Energy will pay a further goodwill payment of £1,304,555 proportionally distributed across affected customers
- lastly, Opus Energy will also make a payment of £260,933 to the Energy Industry Voluntary Redress Scheme that will benefit charities and community projects that help vulnerable customers with energy-related support
Customer overcharging is a serious matter, and Ofgem will take action where suppliers’ systems and billing are not fit for purpose and accurate. Due to the number of customers impacted and length of time this issue continued for, Opus Energy agreed that customers should receive appropriate redress and to that effect has produced in collaboration with Ofgem a suitable action plan to deliver such refunds and compensate customers affected.
Opus Energy took the right steps, promptly alerting Ofgem upon discovery of the system faults and putting in place the required process and system changes to stop and prevent the errors from occurring. Opus Energy proactively engaged with its current customers and provided full refunds and is in the process of contacting affected customers that are no longer supplied by them. Opus Energy has committed to not pursue any underpayments caused by the billing errors.
Opus Energy also pledged to make additional payments to customers to reflect the value of inflation from the time each error occurred based on the Retail Prices Index, and issue appropriate goodwill payments to proportionately compensate customers for the detriment caused by the system faults.
Furthermore, Opus Energy has committed to providing a payment to the Energy Industry Voluntary Redress Scheme to benefit UK energy customers. Ofgem considers that this level of redress reflects the impact that this issue has had on customers, while recognising the positive and proactive steps that Opus Energy has taken to rectify the issue, compensate customers and ensure its processes and systems are compliant.
Accordingly, on this occasion Ofgem has decided not to take further enforcement action and will continue to collaborate with Opus Energy to ensure that the agreed action plan is fully delivered by June 2025.
Ofgem appreciates Opus Energy’s collaborative and proactive conduct in this matter which has ultimately yielded a positive outcome for consumers. Had Opus Energy not engaged proactively and resolved the issues in a timely manner, the redress package sought would have been higher.
Suppliers must be vigilant and ensure customers are charged fairly for the energy they use. Standard Licence Condition 5A requires licenced gas and electricity suppliers to be open and cooperative with Ofgem, which includes self-reporting of potential non-compliance with licence conditions.