UK energy supplier Ovo pays up for inaccurate billing

London — UK independent supplier Ovo Energy has agreed to pay GBP8.9 million ($11.6 million) into a customer fund for inaccurate billing and mischarging over a five-year period, regulator Ofgem said Wednesday.

Ovo is set to become the UK's third largest energy supplier after agreeing to buy SSE Energy Services last year for GBP500 million ($623 million). The deal will see 3.5 million customers transferred to Ovo, which already has 1.5 million customers.

Failings in Ovo's systems and compliance processes resulted in too many customers receiving inaccurate or incomplete information, Ofgem said.

"Ovo Energy did not self-report the majority of the issues despite being aware of them and was slow to put things right," the regulator said.

Inaccurate statements were sent to over half a million customers between July 2015 and February 2018.

Over one winter, consumption was underestimated, leading to under and overcharging.

Some 10,000 customers, meanwhile, were not given renewal terms when tariffs ended, and thousands of pre-payment customers were not put on the correct pre-paid meter cap.

"Ovo Energy now accepts and has corrected these breaches, including refunding its customers affected by overcharging on the prepayment meter cap. It has also written off all amounts owing from customers who had been charged at the wrong rates," Ofgem said.

The GBP8.9 million payment goes into a voluntary redress fund to help vulnerable customers.

While the regulator had the power to issue formal fines, the proceeds of these fines would go straight to the Treasury, Ofgem spokeswoman Ruth Somerville told S&P Global Platts.

"With the redress fund, the money directly benefits customers," she said.

Ovo's acquisition of SSE Energy Services was approved by the Competition and Markets Authority in December, 2019.

Their combined domestic retail market share of 10%-20% in electricity and 10%-20% in gas is behind that of British Gas and E.ON/Npower, the CMA said.

OVO was expanding quickly in the run up to the SSE acquisition, notably as regulator Ofgem's appointed supplier of last resort, acquiring Spark Energy's 290,000 customers in November, 2018 and Economy Energy's 235,000 customers in January, 2019.

It also opened operations in France and Spain and planned to enter the Germany, Italian and Australian markets in 2020.

In February 2019 Mitsubishi Corporation took a 20% stake in OVO for GBP216 million.