Energy firms paid out £77m following Ofgem crackdown

Energy companies paid out more than £77 million in 2023 as Ofgem clamped down on licence breaches.

The regulator recovered a total of £77.2 million during the past 12 months in fines, customer refunds, compensation and alternative action payments. That is almost triple the £27.3 million recovered in 2022.

Examples of breaches include three electricity generators that unfairly raised consumer bills, poor customer service including unacceptable call waiting times and failure to automatically provide compensation for delays in final billing when switching.

As well as fines and alternative action payments, Ofgem also ordered energy firms to pay £13 million to customers in 2023 for poor service.

The vast majority of money recovered from energy companies was paid into Ofgem’s Energy Redress Fund, which benefits charities and community projects that help vulnerable customers with energy-related support.

Since it was set up in 2018, the fund, managed by the Energy Saving Trust, has received more than £137 million and handed out £102 million in grants to 538 projects across England, Wales and Scotland. A further £35 million in funding is available to be distributed with a new round of grant applications due to open in the coming weeks.

Cathryn Scott, director for enforcement and emerging issues at Ofgem, said: “Protecting customers and ensuring that they are treated fairly is at the heart of Ofgem’s mission.

“That’s why we make suppliers pay when they break the rules or fall short of the high standards we set – and when they do, it’s only right that customers should be the ones who benefit.

“Every year, the Energy Redress Fund makes a positive difference to the lives of customers across Great Britain, particularly people who are struggling and vulnerable, so to see the fund pass the £100 million mark is a significant milestone.

“This could not have happened without the thorough investigative work of our compliance and enforcement teams to identify licence breaches or poor behaviour by energy companies, or the Energy Saving Trust who ensure the money is targeted to reach those in need.”

Schemes which have benefitted from the Energy Redress Fund include:

• £20 million in fuel vouchers issued to charities to identify and provide help to vulnerable customers at risk of disconnection from their energy supply
• Providing energy advice to more than 500,000 households and installing energy saving methods for more than 150,000 homes to help reduce bills
• Working to ensure that future home heating controls and new energy technologies work for everyone including people living with disabilities

Laura McGadie, head of energy at Energy Saving Trust, said:  “We are pleased to have managed the distribution of more than £100 million in much-needed funds from the Redress scheme to frontline charities and social enterprises since 2018.

“The projects funded by the scheme are helping customers in the most vulnerable situations through the cost of living crisis, but they also look to the future.

“Charities and social enterprises have a crucial role to play in ensuring no one is left behind as we transition to net zero and that we all have a voice and a role in the changes that are coming to our energy system.”