Industry regulator Ofgem raised a record £77.2 million from poorly performing energy retailers last year. Communities, including energy co-operatives and volunteers trained in energy advice, are taking the lion’s share.
The authority steps in when suppliers breach their licence conditions or are found to be failing customers.
It recovered last year’s £77.2 million in the form of fines, customer refunds, compensation and alternative actions. That’s almost triple 2022’s £27.3 million. The latest sum includes £5 million of direct fines.
Over £57 million of cash recovered from suppliers was paid into Ofgem’s Energy Redress Fund, which benefits charities & community projects designed to help vulnerable customers.
The ERF is managed by the Energy Saving Trust. Since launch in 2018, it has handed out £102 million in grants to 538 projects.
A further £35 million has been added for sharing among projects, including new ones. The ERF now seeks fresh applications; details here.
Examples of licence breaches in 2023 included three generators who unfairly raised bills, or others inflicting unacceptable call waits on customers wanting to change supplier.
Ofgem says it forced suppliers to pay over a million pounds a month for poor service alone. The regulator says 2023’s ‘significant rise’ in fines reflects Ofgem’s proactive work to identify suppliers’ service failures.
“Ensuring customers are treated fairly is at the heart of Ofgem’s mission”, said its director for enforcement Cathryn Scott.
“That’s why we make suppliers pay when they break rules. When they do, it’s only right that customers should benefit.
“Every year, the Energy Redress Fund makes a positive difference to the lives of customers, particularly people who are struggling and vulnerable. Seeing it pass the £100 million mark is a significant milestone.
“This could not have happened without the thorough investigative work of our compliance teams, or the Energy Saving Trust who ensure target the money.”
ERF remedies have included:
- £20 million in fuel vouchers issued to charities to identify and provide help to vulnerable customers at risk of disconnection
- installing energy saving methods for more than 150,000 homes to help reduce bills
- working to ensure that future home heating controls and new energy technologies work for everyone including people living with disabilities
Among the 538 projects supported by the energy redress fund is the Warm Hubs centre in the village of Seahouses, Northumberland.
Redress funding drove this community resource, established by the Community Action Northumberland charity, and a lifeline service last winter at the height of the energy crisis.
Laura McGadie at the Energy Saving Trust, said: “We are pleased to have managed the distribution of more than £100 million in much-needed funds from the Redress scheme to frontline charities and social enterprises since 2018.
“The projects funded by the scheme are helping customers in the most vulnerable situations through the cost of living crisis, but they also look to the future.
“Charities and social enterprises have a crucial role to play in ensuring no one is left behind as we transition to net zero and that we all have a voice and a role in the changes that are coming to our energy system.”
