Energy suppliers are to refund up to 1.5 million households that may have been overcharged because of a fault with pre-payment gas meters.
Energy UK, the industry’s trade body, said the meters installed in homes since 2007 were not set properly, leading to consumers being charged for more gas than they had actually used.
The consumer group Which? described the error as “another shameful example of energy companies failing their customers,” while the regulator Ofgem said it had not ruled out enforcement action against firms.
Typically households overpaid by around 25p a week during the winter months, and over the course of a year are likely to have paid around £7 to £12 more than they should have, according to Energy UK. Some who have had a meter since 2007 may have overpaid by as much as £100 in total.
Pre-payment meters use a calorific value (CV) code to calculate the amount of gas to be charged for, but the fault meant that on some meters this was not set properly resulting in inaccurate readings. Energy UK said the problem had emerged following a complaint by a customer to their supplier. Energy providers are now contacting the customers affected and arranging refunds.
Pre-payment meters are used by some of the poorest households in the UK, and typically cost more to run than standard energy tariffs. Energy UK said suppliers would be making sure refunds were made before Christmas and that where a problem had been detected but was not yet fixed customers would receive forward payments to cover any continued overcharging. However, the executive director of Which?, Richard Lloyd, suggested the firms should go further. “This is yet another shameful example of energy companies failing their customers and one that has hit some of the very people who can afford it least,” he said. “Suppliers need to fix this fault as soon as possible and fully reimburse – with interest – the hundreds of thousands of people who have been overcharged.”
The chief executive of the charity Citizens Advice, Gillian Guy, also called on suppliers to pay interest on top of the money that had been overpaid. Guy said the fact the problem had been going on for so long “shows the second-class service pre-payment customers get”.
She added: “Pre-payment meter customers are already paying higher charges than direct debit customers, so this is adding insult to injury.”
Angela Knight, chief executive of Energy UK said suppliers were working hard to roll out a solution to the problem. “The meters were manufactured with a problem where they over-collected from customers. However, the companies know who is affected and will be getting in touch directly to put the meters right and refund any money owed,” she said. “The suppliers and the wider industry are all very sorry this problem has occurred but are already getting in contact with customers.”
Refunds are likely to be complicated by the fact that pre-payment meters are often found in rented accommodation and the people who made the overpayments may have moved on, and because customers who switch provider retain the same meter.
British Gas said it had 700,000 of the meters in homes and was in the process of working out how many customers had overpaid. It said some may have been undercharged but where that was the case it would not be recovering costs. Refunds to vulnerable customers would be prioritised it said, and it would be working with other suppliers to determine who owed how much to each customer.