THOUSANDS of Octopus Energy customers are set to receive a share of £1.5 million in compensation after Ofgem found the company had broken the rules.
More than 34,000 energy customers didn’t get their final bills within six weeks of leaving, breaching the energy watchdog’s rules.
Octopus had agreed to pay a total of £1.48million in compensation and redress, an average £43 per affected customer.
This includes refunds of £231,000 of credit that was remaining on accounts when they were closed, and a further £1,250,000 in compensation to affected customers.
Affected customers don’t need to apply for the money, as Octopus is reaching out to everyone impacted.
Ofgem said that a final bill needs to be produced for all customers in order to give them a clear indication of their final debit or credit position.
The regulators “guaranteed standards” mean energy suppliers must send a final bill within six weeks of a customer leaving or switching.
They must refund any credit balance within 10 working days of sending the final bill.
If they break these rules, suppliers have 10 working days to automatically pay the customer £40 (£30 before January 2025) in compensation.
Missing this compensation deadline could result in an additional £40 payment.
Who qualifies for Octopus compensation?
Over 34,000 prepayment meter customers with Octopus Energy between 2014 and October 2023 are eligible for compensation.
A prepayment energy meter customer pays for energy in advance by topping up their meter, similar to a pay-as-you-go system.
These meters require customers to add credit using a card, key, or app before they can use gas or electricity.
This system is often used by those wanting to manage their energy costs or who have had trouble paying bills in the past.
If you paid by direct debit and had a standard meter where you pay for energy after using it, you are not eligible.
How and when will I be paid?
Octopus said it has reached out to all affected customers using the contact details they have on record.
For those they couldn’t reach, the company has enlisted a third-party agency to help trace and contact them.
Payments have started to be issued directly into customer accounts where possible.
For those who can’t be paid this way, cheques are being issued and sent to their last known address.
Octopus expects to provide compensation to all contactable customers by September.
If any of the compensation or refunds remain unclaimed after multiple attempts to contact customers, the money will be transferred to the Energy Industry Voluntary Redress Fund (EIVRF).
This fund helps finance projects that support vulnerable energy consumers, ensuring the money is put to good use.
If you believe you were affected by the issues above and haven’t been contacted by Octopus, you can reach out to the company to check your eligibility.
You can do this by calling 0808 164 1088 or sending an email to hello@octopus.energy.
What energy bill help is available?
There's a number of different ways to get help paying your energy bills if you're struggling to get by.
If you fall into debt, you can always approach your supplier to see if they can put you on a repayment plan before putting you on a prepayment meter.
This involves paying off what you owe in instalments over a set period.
If your supplier offers you a repayment plan you don’t think you can afford, speak to them again to see if you can negotiate a better deal.
Several energy firms have schemes available to customers struggling to cover their bills.
But eligibility criteria vary depending on the supplier and the amount you can get depends on your financial circumstances.
For example, British Gas or Scottish Gas customers struggling to pay their energy bills can get grants worth up to £2,000.
British Gas also offers help via its British Gas Energy Trust and Individuals Family Fund.
You don’t need to be a British Gas customer to apply for the second fund.
EDF, E.ON, Octopus Energy and Scottish Power all offer grants to struggling customers too.
Thousands of vulnerable households are missing out on extra help and protections by not signing up to the Priority Services Register (PSR).
The service helps support vulnerable households, such as those who are elderly or ill.
Some of the perks include being given advance warning of blackouts, free gas safety checks and extra support if you’re struggling.
Get in touch with your energy firm to see if you can apply.
How has Octopus responded to the findings?
Octopus said Ofgem’s rule requiring final bills for prepayment customers after moving out is “impossible to implement” most cases.
The company said that 60% of prepayment customers don’t notify Octopus when they move, and most use up their remaining credit or leave it for the next tenant.
Octopus also blamed issues with outdated prepayment systems, limited customer bank details, and refund cheques often going uncashed due to missing forwarding addresses.
Instead of strictly following Ofgem’s rules, Octopus said it charged prepayment customers £70 less than the price cap and left any leftover credit on meters for new tenants to use.
The company claims these policies saved customers over £7million compared to sticking with Ofgem’s approach.
Rachel Fletcher, director of economics and regulation at Octopus Energy, said: “Octopus has always been focused on doing the right thing for customers and thinking outside the box to deliver good outcomes for customers despite imperfect industry systems and data.
“With energy costs soaring, we’d like to see Ofgem put people over policies. People want lower bills. We’d like to see Ofgem focusing its efforts on delivering that.”
