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Energy networks fail to pay out £5.1m compensation for customer service failures

3 May 2019

Energy customers have missed out on an estimated £5.1 million in compensation over the last 3 years, says a new report by Citizens Advice.

The payments are for poor customer service, such as power cuts due to bad weather which take a long time to rectify, and should have been made by their network providers. These are the companies who run the energy infrastructure as opposed to firms who supply gas and electricity to customers.

The Citizens Advice report, Standard Issue, found that very few domestic and small business customers claim the payments they are entitled to when energy network companies fail to meet their obligations.

According to the charity, this is due to a mixture of customers not realising they qualified for compensation, people forgetting to claim, or not applying within the 3-month time limit.

Energy network operators are required to meet 39 guaranteed standards of service set by the regulator Ofgem. These include how they respond to emergencies, their complaints procedures, and the speed of reconnection after bad weather. In one case, 99% of compensation due for not meeting a specific requirement went unclaimed.

In general, the report shows the network companies, in particular those providing electricity, are doing well at meeting these ‘standards.’

Guaranteed standards should mean guaranteed compensation

A compulsory compensation scheme covers some of these obligations and automatically pays out when companies fail to meet their commitments. But others, including when people suffer interruptions to their electricity supply or are due notice on planned interruptions, are subject to voluntary arrangements.The electricity network companies paid out just under £5.4 million in compensation, including voluntary payments. However a further £2.5 million would have been paid if all customers had claimed the compensation they’re entitled to.

The gas networks refunded more than £11 million in compulsory and voluntary compensation payments between 2015-18. Consumers would have received £2.6 million more if all the guaranteed standards were controlled by a compulsory compensation scheme.

In its role as the official consumer watchdog for energy, Citizens Advice is calling for Ofgem to tighten its current regulations and work towards the implementation of automatic compensation across all standards.

In addition, the charity wants the regulator to introduce financial penalties for poor performance.

Citizens Advice says network companies need to work harder to make customers more aware of the compensation they are entitled to, as well as continuing to work on improving their levels of service.

Gillian Guy, Chief Executive of Citizens Advice, said:

“This money should be in customers’ pockets. We want Ofgem to get tougher with the energy network companies so that customers automatically receive all the compensation they’re entitled to.

“Guaranteed standards should mean guaranteed compensation. At the very least there should be a system of financial penalties for those energy firms who still don’t proactively pay people what they’re due.”

Notes to editors

  1. Standard Issue assesses the performance of companies over 3 years between 2015/16 to 2017/18.

  2. Citizens Advice’s analysis of performance data shows that in general electricity network companies are “excellent” at meeting the current required standards.

  3. The quality of service provided by the gas networks lags behind, but has improved during the three years covered by the report.

  4. Citizens Advice includes the national charity; the network of independent local Citizens Advice charities across England and Wales; the Citizens Advice consumer service; and the Witness Service.

  5. Citizens Advice is the statutory consumer advocate for energy and post. We provide supplier performance information to consumers and policy analysis to decision makers.

  6. The Citizens Advice Witness Service provides free, independent support for prosecution and defence witnesses in every criminal court in England and Wales.

  7. Citizens Advice offers Pension Wise services at 500 locations in England and Wales.

  8. Citizens Advice’s services are free, independent, confidential and impartial, and available to all regardless of race, gender, disability, sexual orientation, religion, age or nationality.

  9. To get advice online or find your local Citizens Advice, visit citizensadvice.org.uk

  10. For consumer advice, call the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 to talk in Welsh.

  11. We helped 2.6 million people face to face, by phone, email and webchat in 2017-18. For service statistics see our monthly publication Advice trends.

  12. Citizens Advice staff are supported by over 23,000 trained volunteers, working at over 2,500 locations in England and Wales.