British Gas may have been overcharging millions of its residential customers for the past five years, potentially breaching industry rules, regulators have warned.
Ofgem has said that British Gas has paid £10 million into a trust for vulnerable customers in order to settle a heated debate surrounding its prices.
The donation is almost at the same level of the £10.5 million fee that SSE paid back in April following “prolonged and extensive” mis-selling on the doorsteps of the UK.
The Daily Telegraph reports that British Gas was expected to announce this donation at the end of last week, however, it was only revealed when sources contacted the newspaper.
Ofgem says …
According to Ofgem, during 2006 and 2011, British Gas failed to round down the ‘calorific value’ of its energy, a charge that refers to the heat or thermal energy in the gas used by a customer.
Ofgem asks companies to use just one decimal point when rounding down, but British Gas used four, it was found.
An Ofgem spokesman commented: “British Gas’s interpretation of the regulations meant that although customers didn’t pay for energy they did not receive, they paid more than regulations allow.”
However, the regulator noted that the impact the issue would have on customers is as of yet “unclear”.
It stated that British Gas could have altered the main unit price of gas and electricity in a bid to make up for the higher charge when it comes to calorific value. However, a spokesman for the company claimed that it would be impossible to tell.
British Gas says …
Last night (June 17th), the energy giant claimed it had done nothing wrong, and none of its customers had been affected.
When it came to the £10 million it has paid out, a British Gas spokesman suggested the company simply wanted to resolve the debate and move forward, as the legal fees were mounting up.
The company commented: “We are making this donation following clarification from Ofgem that, while we believe we were operating in line with the regulations, we accept there was an alternative interpretation.”
Energy market reshuffle
This comes ahead of another big reshuffle of the energy market this week, with Ofgem expected to propose ways to simplify the tariffs of the big six energy suppliers, making saving money on energy bills easier for households.
The energy regulator is also aiming to break the “stranglehold” of the big six, demanding that big suppliers provide wholesale power to their smaller rivals, and set out price plans two years ahead of time.
While the government and a number of consumer groups welcomed these measures, others claimed they do not go far enough against a backdrop of increasing public and political anger about high prices and the major role of the biggest suppliers.