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

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

Friday 03 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.”