Utilita pays out £830k following Ofgem investigation

Energy retailer Utilita has agreed to pay out £830,000 in compensation and redress after an Ofgem investigation raised concerns over how it applies additional support credit to customers.

The prepayment meter (PPM) specialist supplier was ordered by the regulator in September to stop telling people they are not required to provide such credit to vulnerable PPM customers who are thought to be self-disconnecting.

Ofgem said its investigation into the retailer suggested it was not taking individual circumstances into consideration when deciding whether or not to provide the credit.

The assessment was based on a review of scripts of employees talking to customers, training materials, procedures, policies and recorded calls with customers.

Ofgem said more than 25,000 customers were potentially affected, including those with medical issues and those classed as vulnerable.

Utilita will pay £20 to all customers potentially affected by the issue, totalling £508,260. It will also make a £321,740 contribution to the Voluntary Redress Fund.

Speaking to Utility Week recently the company’s chief executive, Bill Bullen, explained Utilita already had processes in place to issue additional support credit before it became an official licence condition. A feature on the supplier’s app, called Powerup, allows customers to top up their credit up to £100 to ensure they do not go off supply.

He said after Ofgem made providing additional credit an official licence condition, Utilita was deemed not compliant with the new rules as it would not allow customers with outstanding additional credit to top up until this was paid off.

The supplier has since changed its software to allow customers to top back up to £100 without first paying off the previous credit.

Following the news the supplier is to pay redress, a Utilita spokesperson said: “During the period in question, we provided at least 1.7 million interest-free loans – worth a total of £31 million – to customers who, temporarily, could not afford to top-up their prepayment meters and hence asked us for money. We were able to help the vast majority.

“Ofgem has concluded that Utilita potentially did not take individual circumstances into consideration when refusing to provide a further 25,000 customer loans – a minute percentage of the total provided – over the same period.

“We have led the way with additional support credit – even allowing our customers to quickly self-serve the support they need – since launching the service in 2015. However, we feel that the licence provisions on additional support credit, introduced in December 2020, do lack clarity.

“While we feel under the circumstances that the provisional order and Ofgem approach was harsh, we have agreed to provide a payment to those customers who were potentially adversely impacted.”

Cathryn Scott, Ofgem’s director for enforcement and emerging issues, said: “Prepayment meters are currently relied on by around 4 million UK households, and the current cost of living issue is placing pressure on many households, which in turn is causing more people to require additional support credits to top-up for their prepayment meters.

“While Utilita has moved swiftly to correct these issues and agreed to compensate those affected, this action should serve as a reminder to other suppliers to go further to ensure vulnerable groups are getting the support they need, particularly during the colder winter months.”