United Gas & Power (UGP) has been hit with a substantial £2.1 million fine by Ofgem after the regulatory body found that the company had violated its license conditions, including deliberately overcharging its customers.
The investigation into UGP’s practices spanned nearly three years, starting in July 2020, during which time the business energy supplier served approximately 2,700 customers.
What did the investigation uncover?
In February 2020, Ofgem’s investigation revealed that United Gas & Power (UGP) had invoiced some households based on inflated consumption estimates, even though the company had access to actual consumption data. This practice allowed UGP to generate additional revenue to address a budget shortfall.
The overcharging was significant, with the average customer being overbilled by more than £2,000, and one customer being overcharged by an alarming £22,000. Regrettably, some customers had to wait up to seven months before receiving their refunds.
Prior to Ofgem’s intervention, UGP took proactive measures and apologized to the affected customers, making significant goodwill gesture payments to rectify the situation.
Alongside the consumer overcharging, Ofgem identified eight other breaches of Standard License Conditions (SLCs) committed by UGP, some of which persisted for five years or more.
One of these breaches involved mishandling credit balances on former customers’ accounts, resulting in UGP accumulating nearly £250,000 in credit balances from its microbusiness consumers (MBCs). While UGP has returned just over half of this money, some former customers cannot be located.
As part of the settlement, Ofgem agreed with UGP to impose a penalty of £2,111,798.00.
Out of this amount, £1 represents a nominal fine, and the remaining £2,111,798.00 (minus £1) will be paid to Ofgem’s Voluntary Redress Fund. These funds will be allocated to appropriate organizations for the benefit of energy consumers.
In addition to the billing-related breaches, UGP also violated SLCs regarding the proper identification of MBCs, resulting in some affected customers not receiving the necessary additional protections intended for MBCs. Furthermore, UGP breached conditions relating to providing essential information during contract renewals, leaving many MBCs without the required details to make informed decisions about switching suppliers and accessing better deals.
UGP has taken corrective actions to address some of the breaches found in the investigation. However, the gravity of their overcharging behavior and other violations remains concerning.
Cathryn Scott, Ofgem’s director of enforcement and emerging issues, condemned UGP’s unacceptable actions, stating that no matter the financial difficulties a company faces, deliberately overcharging customers to boost revenue is unjustifiable and wholly unacceptable.
Additionally, Ofgem expressed concerns about UGP’s failure to promptly refund credits owed to former customers, as the company retained substantial sums in its own account until Ofgem intervened to enforce the refunds.
How can you ensure you’re not overcharged?
Here’s some detailed information for each step to help you ensure you’re not overcharged:
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Monitor Your Bills: Regularly review your energy bills and statements to ensure they match your expectations. Check for accurate meter readings, service charges, energy prices and any additional fees. If you notice discrepancies, address them with your service provider promptly.
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Understand Your Tariff/Contract: Read your energy tariff or service contract thoroughly. Understand the pricing structure, including fixed and variable charges, peak and off-peak rates, and any potential penalties or exit fees for breaking the contract early.
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Check Meter Readings: Provide accurate meter readings to your service provider, ideally on a regular basis. This helps ensure that your bills reflect your actual usage, rather than estimates, which can often lead to overcharging.
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Seek Clarity: If you don’t understand a charge on your bill or if the amount seems unusually high, contact your service provider for clarification. Ask them to explain each component of the bill to ensure you’re being charged correctly.
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Compare Rates: Periodically compare energy rates or service costs from different providers. Use comparison websites or tools to see if you could save money by switching to a different plan or provider that offers better rates.
What is Ofgem role in the energy market?
Ofgem, short for the Office of Gas and Electricity Markets, plays a crucial role in the energy market of the United Kingdom. As the country’s independent energy regulator, Ofgem is responsible for protecting the interests of consumers, ensuring fair competition, and promoting the efficient functioning of the energy industry.
One of its primary objectives is to safeguard the rights of energy consumers, advocating for affordable and reliable energy supplies. Ofgem enforces rules and regulations to prevent anti-competitive practices and market abuse, promoting transparency and accountability among energy suppliers. The organization also works to encourage the adoption of sustainable and environmentally friendly energy practices, supporting the UK’s transition towards a low-carbon future.
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