Utilita Energy is to pay out £830,000 after it was rapped by regulator Ofgem over its support for vulnerable households.
The customers potentially affected will be sent £20 each by December 23, totalling £508,260, in most cases as a credit to their prepayment meter. Utilita has agreed to pay a further £321,740 into the Energy Redress Fund, which supports energy consumers in vulnerable situations. The money is being paid to some customers who had a request for additional support credit declined.
The industry watchdog said that the energy supplier, which has more than 775,000 electricity and 648,000 gas customers, failed to consider individual circumstances when providing additional support to 25,000 of its customers on prepayment meters, including those with medical issues and those classed as vulnerable. Utilita agreed to the financial redress package instead of a penalty, which means those customers affected will get the payment more quickly and Ofgem said it was happy with the outcome to the problem, which was highlighted in September.
Read more: British Gas, Scottish Power, SSE and Ovo named and shamed as energy vouchers fail to to arrive
The issue arose as part of an assessment by Ofgem to make sure suppliers are delivering for consumers. The energy regulator said Utilita had not taken individual circumstances into consideration when deciding whether or not to provide additional support credits for customers topping up prepayment meters, an interest-free loan by a supplier to assist a customer who may not be able to top-up their prepay meter because they do not have any money to do so. The assessment was based on a review of scripts of employees talking to customers, training materials, procedures, policies and recorded calls with customers.
Ofgem was concerned about Utilita’s processes to assess if prepayment was safe and practicable for some of its customers, and said that the supplier had failed to consider the customer's individual circumstances when assessing Additional Support Credit provision.
A Utilita spokesman said: "At Utilita, we are proud of the way we run our business and treat our vulnerable customers. During the period in question, we provided at least 1.7m interest-free loans – worth a total of £31m - 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. We welcome Ofgem’s positive acknowledgement of our approach."
Cathryn Scott, Ofgem’s director for enforcement and emerging Issues, said: “As the energy regulator, protecting consumers is our top priority, and we have strong expectations that energy suppliers must take the individual circumstances of consumers, particularly those who in vulnerable situations, into consideration. Prepayment meters are currently relied on by around four 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.”
Utilita, which was set up in 2003, specialises in pay-as-you-go (PAYG) prepayment smart meters and claims it’s the ‘smart energy expert’ . It has been installing smart prepayment meters since 2008 and around 90% of its customers have smart meters. Last year, it took on the customers of Eversmart Energy, Omni Energy and Our Power last year when the smaller suppliers closed.
The regulator’s update comes after Ofgem last month told all 17 energy suppliers in its third review into the sector to improve their support for customers, in particular vulnerable ones. Utlilia was one of five suppliers singled out by the regulator as having “severe weaknesses” , along with Good Energy, Outfox, So Energy and TruEnergy.
The treatment of vulnerable energy customers by gas and electricity suppliers has been in the spotlight as temperatures drop and energy consumption increases. There have been warnings that excess deaths could rise as vulnerable people skimp on heating and those on prepayment meters are missing out on vouchers.
Now read:
- Energy crisis: Can your energy company move you to a prepay meter to clear debt?
- How and when you might get a cold weather payment this year
- Tumble driers, radiators and heated airers: Work out the best way to get your laundry dry amid the energy crisis
- Changes to Warm Homes grant mean some miss out this year - list in full of who is eligible
- Cost of living: Work out how much your heating costs per hour
- How to defrost the condensate pipe on your boiler in 4 easy steps
