E.ON to Pay GBP7.75 Million Penalty for Overcharging Customers - Ofgem

By Ian Walker

LONDON--Electricity firm E.ON SE (EOAN.XE) is to make a 7.75 million-pound ($11.54 million) penalty payment to Citizens Advice after the U.K. energy regulator Ofgem said the utility had overcharged some of its customers.

E.ON incorrectly charged exit fees and/or overcharged customers following price rises, the regulator said. This latest penalty payment is in addition to the GBP400,000 that E.ON has already paid back to potentially affected customers. It also said E.ON is in the process of refunding remaining customers to ensure they didn't lose out financially.

Under Ofgem rules, suppliers must give customers 30 days' notice of a price rise to allow them the chance to switch before the increase takes effect. If a customer signals their intention to move supplier within the period, they don't incur exit fees or the higher charge even if the switch occurs after the price rise.

E.ON was found to have made billing errors in respect of price rises in January 2013 and January 2014, Ofgem said.

Ofgem said the level of penalty reflected the fact that E.ON has made the same error previously as well as making senior level commitments that it rectified its processes. Also taken into account was that E.ON notified Ofgem of the billing issues and has cooperated throughout the investigation.

"E.ON's errors meant customers who took the chance to switch were wrongly charged. It is important that E.ON has repaid potentially affected customers and cooperated with the investigation. However it's absolutely unacceptable that E.ON failed to provide these vital customer protections yet again and this persistent failure is the reason for the high penalty," said Sarah Harrison, senior partner in charge of enforcement at Ofgem.

Write to Ian Walker at [e-mail]; @IanWalk40289749

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