Ofgem ruling sees E.ON forced to repay £1.4m to ex customers

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In a time where many people are struggling to pay actual fuel energy bills, it must have been particularly galling for E.ON customers who wanted to leave the company, to then have to pay an ‘exit fee’. But today a ruling from Ofgem declared the charges by E.ON were incorrectly applied and the energy company was forced to repay its customers. According to the Guardian, around 100,000 former customers are affected and they will receive up to £100 for incorrectly being charged an exit fee, all for simply wanting to leave the company.

E.ON says that customers will be sent cheques in January 2013 which will reimburse the exit fees charged, plus interest at 8%. But disgruntled customers are up in arms about the charges and recent posts in relation to the Guardian article suggest that people are believing that E.ON are only reimbursing customers because Ofgem have found them out. It is expected that E.ON will have to pay out around £1.4million to ex customers and as a ‘goodwill gesture’, the company have also donated about £300,000 to a consumer fund run in partnership with Age UK.

The exit fees were charged when customers switched to new suppliers after E.ON raised their prices in 2008 and 2011. Current energy regulations stipulate that energy companies have to give 30 days’ notice of any price change and are not allowed to apply exit charges or price increases to customers who want to transfer their accounts within that period. However, E.ON said that its processes meant the rule had not been applied consistently, and that some customers who has switched to another supplier had been charged the new higher price while their switch was still going through the system.

E.ON have said the average rebate to ex customers would be around £14.83, with customers receiving between £5 and £100. E.ON were originally investigated by Ofgem who now say that the energy firm had assured them that all customers who were charged the exit fees had been identified and would be reimbursed.

Sarah Harrison, who is the senior partner in charge of enforcement for Ofgem, said: “Ofgem has put in place protections for consumers so they can get a fair warning if their supplier puts up prices and time to shop around for a better deal. E.ON has accepted it failed to meet these protections. Today’s announcement that it will compensate customers is a positive step by the company to put right their mistakes and is welcome.”

Whilst David Bird, customer service director at E.ON UK, admitted: “We are very sorry to have let down some of our former customers and have made clear that we will refund the money plus interest. Our systems are being updated to ensure this mistake can never happen again. We’ve been open in our failure with the energy regulator, Ofgem, and are pleased to have agreed with them how we can put this right and have identified all customers who are due to receive payment from us in January.”

However, ex E.ON customers are still not happy with angry posts printed such as “’Incorrectly being charged’ being a euphemism for “robbed” or “fleeced”, and “Because it was Ofgem that found the problem, E.On should not only pay the money back but be fined for breaking clearly set out rules” and “We took £1.4million from customers unlawfully and had no intention of giving it back until the regulator investigated us following complaints from consumers.”

Source: Guardian