ScottishPower pays £1.5m for overcharging customers

UK energy regulator Ofgem announced that Scottish Power Energy Retail Ltd will pay £1.5 million in refunds and compensation “for charging customers above the price cap during the height of the energy crisis.”

Ofgem agreed the redress package “after the supplier confirmed that between 2015 and 2023, it mistakenly overcharged 1,699 direct debit customers a higher rate, which should only apply to those who pay by standard credit (on receipt of bill).”

ScottishPower said it reported the technical error as soon as it was discovered last year.

Ofgem said: “Scottish Power has paid a total of £250,000 in direct refunds to affected customers, plus another £250,000 in goodwill payments – equating to an average of £294 per customer.

“Scottish Power has also agreed to pay £1 million to Ofgem’s Energy Industry Voluntary Redress Fund, which benefits charities and community projects that help vulnerable customers with energy-related support.

“This overcharge initially began in 2015 and continued across 11 price cap periods to June 2023 – a period when energy prices reached historically high levels, prompting the government to step in and provide additional support.

“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.”

In a statement, ScottishPower said it agreed a customer compensation package with the energy regulator after it identified that “a small number of direct debit customers were mistakenly billed at the higher rate paid by standard credit customers under the price cap.”

ScottishPower said error affected a small proportion (0.04%) of its total customer base between 2015 and 2023.

It said it took immediate steps to correct the issue, which saw customers paying – on average – £149 more than they should have in the full eight-year period.

ScottishPower said it has also “put additional controls and monitoring in place” to reduce the risk of anything similar happening in future.

“The agreed compensation package, which includes direct refunds as well as goodwill payments, means affected customers each received an average of £294,” said ScottishPower.

“All refunds and goodwill payments have been made and there is no need for customers to take any action.

“ScottishPower will also pay £1 million to the Energy Industry Voluntary Redress Fund, which benefits charities and community projects that help vulnerable customers with energy-related support.”

Andrew Ward, CEO of ScottishPower’s 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.

“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.”