Five million prepay customers 'owed' rebate, says Federation » Bill payments » 24dash.com

Around five million people are entitled to a rebate of up to £71 from the big energy companies – a leading campaign group has told energy regulator Ofgem.

The National Housing Federation is calling on Ofgem to compel the energy firms to pay the rebates, after the regulator produced a report on Monday (6 October), ruling that many customers who pay for their gas and electricity through prepayment meters have been unfairly overcharged.

Ofgem’s investigation, launched in February, found that the firms have been charging their prepayment customers an unfair amount for their energy, with the average prepayment meter customer paying £119 more for their gas and electricity per year than those on direct debits.

The regulator ruled that the firms were entitled to charge prepayment meter customers £88 - for the cost of maintaining the meters - but that any charge above that figure was unjustified.

According to the Federation, all but one of the six big energy firms have been charging their prepayment meter customers more than the justified sum, meaning companies have made an excess charge of £193m per year from some of their poorest customers this year.

Under the rebate proposal, British Gas prepayment customers would be entitled to rebates of up to £71.

Npower customers would be entitled to up to £47, Scottish and Southern customers would entitled to up to £39, Scottish Power customers would be entitled to up to £20 and E.on customers would be entitled to up to £16.

Only EDF energy customers would not be entitled to a rebate - as their supplier bucked the trend by charging £5 less than the £88 maintenance costs.

The Federation has written to Ofgem demanding that it forces the five offending energy companies to repay the unjustified excess sums charged to customers from February, when the probe was launched, until next February – which is the earliest point at which the Federation believes that under the Ofgem action plan the energy firms will be compelled to charge fairer sums.

Following the publication of the report, Ofgem is consulting on its findings until December. If the energy firms do not stop making excess charges to customers by then, the regulator will then look at changing the licensing conditions imposed on the energy firms.

This could take several more months, as this will also require consultation, and delay any action against those firms who fail to lower their tariffs.

Federation Chief Executive David Orr said: “Ofgem has effectively found five of the energy companies guilty of overcharging some of the poorest in society by £193m per year. Surely this means that those affected are now owed a rebate?

“Ofgem needs to show some leadership and ensure the customers it says have, in effect, been overcharged get their cash back.

“It is an absolute disgrace that these fat cat firms have charged such high sums from some of the most vulnerable in the country for so long. Ofgem needs to prove it has teeth and act now."

There are around six million prepayment meter customers. Although most come from low income backgrounds the big energy companies have been charging more for their gas and electricity than any other customers.