UK & World News

  • 28 February 2014, 8:59

Ofgem Demands Big Six Return Customer Cash

Ofgem will today intensify the pressure on the big six energy companies by demanding that they hand back hundreds of millions of pounds in surplus customer funds.

Sky News understands that the energy regulator will announce that it is pursuing a series of fresh actions against the likes of Npower, British Gas and SSE over an estimated 400m held in accounts which have been closed.

The broadside will represent Ofgem's latest salvo in an increasingly bitter row which has drawn in the leaders of the three main Westminster parties in recent months.

Andrew Wright, the interim chief executive of Ofgem, is understood to have written to the companies on Thursday to urge them "to do the right thing by customers" to tackle the issue of funds held in closed accounts.

Insiders said the regulator wanted the big six to step up their efforts to reunite customers with their cash and would be assessing whether they had breached its rules.

It will also call on Friday for companies to find ways to use money that they cannot refund to customers to benefit consumers more widely and communicate what they will do with the unclaimed funds, according to the source close to the regulator.

Ofgem's announcement on Friday will be targeted at gas and electricity accounts which have closed, either because the customer has changed supplier or moved house.

The regulator is understood to believe that the total amounts to hundreds of millions of pounds across several million accounts during the last six years.

The major energy suppliers are expected to respond by pointing to the scope of existing efforts to return money to consumers and the difficulty they frequently face in contacting them.

Energy UK is also likely to argue that the amount of customers' money held excessively is only a fraction of the unpaid charges owed to the gas and electricity suppliers.

Ofgem has requested details of each of the big six's policies in this area, and has decided to act because its "analysis indicates wide variations in company practices and an unacceptably large amount of money being retained rather than returned to consumers", according to a person close to the regulator.

Mr Wright is understood to have said in his letter that the delay in returning cash to consumers risks undermining their faith in switching providers, a key plank of ministers' desire to bolster competition.

The big six energy companies have all raised prices in recent months, but some have faced criticism for failing to pass onto consumers the benefit of a relaxation of green levies.

Ofgem has also targeted them over the release of excessive funds taken from customers by direct debit, which the suppliers have agreed to address.

This week, it said that energy companies would have to publish the prices for which they trade energy to allow better access to independent operators.

Mr Wright plans to meet with the chief executives of the energy companies and Energy UK in April to discuss their progress on the closed account issue.

None of the energy companies contacted by Sky News would comment, while Energy UK could not be reached for comment.

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