Ovo Energy to pay more than £10m over prepayment meter monitoring failings | Energy industry

Ovo Energy has agreed to pay more than £10 million after Great Britain’s energy regulator Ofgem found that failure to monitor vulnerable customers with prepayment meters (PPMs) could expose them to a “clear risk of harm”.

Ofgem found Ovo failed to adequately monitor PPM customers, including those on the priority services list, leading to breaches of watchdog rules designed to protect customers in vulnerable situations. ​

In response to the findings, Ovo agreed to a settlement package that included a £7 million payment to Ofgem’s voluntary compensation fund, as well as a £3.4 million loan and debt relief package for some of its most vulnerable customers; The regulator said this was in lieu of compensation.

Ofgem added that all Ovo customers who will receive a loan or debt write-off payment will be contacted by Ovo and will not need to take any action.

In addition, Ovo, founded by former Tory donor Stephen Fitzpatrick, is in the process of paying £1.1 million to customers in the Scottish Highlands and islands after a compliance study by the regulator found some rural customers did not have appropriate access to engineer support for more than two years from 1 January 2022 to 1 April 2024.

During Ofgem’s investigation into Ovo, the company took actions to support vulnerable customers, including making assistance visits to people who had been disconnected from their energy supply for more than 72 hours and had not responded to any communications during that time. In some cases, the energy supplier was not contacting customers whose credits had expired.

Ofgem’s investigation examined Ovo’s treatment of existing PPM customers, rather than customers who installed PPMs without their consent.

Cathryn Scott, Ofgem’s director of market surveillance and enforcement, said: “It is clear that Ovo has failed to support vulnerable PPM customers and it is right that they take action to improve their processes.”

“Prepayment meters are a positive choice for many customers, helping them keep their energy use under control and reporting high levels of satisfaction, but this is not suitable for everyone and strong monitoring needs to be in place to protect vulnerable consumers.”

In its statement, Ovo said it acknowledged that some of its historical processes fell below expected standards. It added that it had significantly improved its policies, systems and training since 2024 and how its policies were monitored, including the implementation of a new policy on how it identifies and supports vulnerable customers.

An Ovo spokesperson said: “Ofgem’s investigation examined how we supported prepaid meter customers between 2018 and 2024. We recognize that some of our historical processes have fallen below expected standards and we are sorry for this.

“Keeping our customers safe and supporting is very important to us and we recognize there are areas where we need to do better.”

Ovo’s deal is the latest blow to the company, which was fined £2.7 million in January for failing to pass on subsidy payments for winter energy bills to thousands of vulnerable customers during the energy cost crisis.

German energy group E.ON said last month it had agreed to buy Ovo in a deal that would create the UK’s largest gas and electricity supplier by number of households served.