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Energy companies told to give cash back to customers – Updated

Ofgem has warned the big six that more needs to be done to return the hundreds of millions of pounds in unused customer accounts

British homes could be in line for a £400m refund on past energy bills

British homes could be in line for a £400m refund on past energy bills

Updated – SSE responds to Ofgem’s comments

The energy regulator has called on the UK’s big energy companies to return money held in closed customer accounts. Ofgem estimates that the big six are holding roughly £400m in accounts which were closed once customers switched to another account.

Suppliers are likely to argue that they do try to return money, however, this is process is difficult as many customers have moved home.

Second Ofgem intervention this week

This is the second time this week that Ofgem has spoken out and intervened in the running of the energy industry. Just two days ago the organisation discussed new regulations which would see energy companies forced to disclose wholesale gas prices up to two years in advance.

The rules should make it easier for small suppliers to enter the market and increase its overall competitiveness. The rules are due to be implemented on 31 March.

‘Money […] rightfully belongs to customers’

Director of Consumer Policy at uSwitch Ann Robinson said: “Today’s announcement from Ofgem will be welcome news to consumers.  This money may be held in closed accounts, but rightfully belongs to customers and Ofgem is absolutely right to take steps to ensure that it is returned.

“The parameters it has set are correct; if after all avenues are exhausted and the money still cannot be returned then the supplier should use it to the benefit of other customers.”

‘Prevention is the best cure’

“Over seven in ten households (73%) have gone without heating at some point this winter because of cost and over a third (36%) say that these cutbacks are affecting their quality of life or health.  With so many struggling to stay warm, these funds could really make a difference.

“Finally, Ofgem has made it clear that prevention is the best cure and it will be expecting suppliers to tighten their processes to ensure accounts are closed properly. This is in everyone’s interests as consumers need to feel confident that suppliers are getting these basics right,” added Robinson.

‘Bad debt […] is about four times the amount of credit that couldn’t be returned’

SSE responded and said that although the company did its best to refund former customers, and do so automatically when they have bank details, some are impossible to trace.

SSE’s spokesperson added: “We’re happy to work with anyone who has legitimate suggestions for how we can find customers more easily and efficiently.

“However, the reality is that the bad debt we have had to write off in recent years is about four times the amount of credit that couldn’t be returned, so this is not a situation that benefits us.”

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