Energy supplier Octopus Energy has been ordered to pay nearly £1.5 million to more than 34,000 prepayment meter customers following billing failures spanning almost a decade.
The energy regulator Ofgem found the company failed to issue final bills within the required six-week period to customers who switched suppliers or ended their contracts between 2014 and October 2023.
The investigation revealed that affected customers will receive an average of £43 each through a combination of refunds and compensation payments.
The case highlights ongoing concerns about billing practices affecting prepayment customers, who often face greater financial pressures than those on standard energy tariffs.
Ofgem's investigation determined that Octopus must pay £1.25 million in compensation to the affected customers,
GETTYOfgem's investigation determined that Octopus must pay £1.25 million in compensation to the affected customers, alongside £231,000 in refunds for credit remaining on closed accounts.
The regulator first became aware of the issue after another energy provider, E.ON Next, self-reported similar billing errors to Ofgem.
Beth Martin, director for consumer protection and competition at Ofgem, said: "It's important that customers receive final bills in accordance with our rules, so they are aware of any credit remaining on their accounts and can reclaim it."
She added: "This is particularly important for prepayment meter customers who are more likely to be in financial difficulty."
Martin emphasised that Ofgem would maintain strict oversight of the sector, stating: "We will continue to closely monitor compliance with our billing rules, and drive improvements in the sector so customers can expect the highest standards of service from their energy supplier."
The regulator confirmed that Octopus has now addressed the billing error and compensated affected customers appropriately.
The regulator confirmed that Octopus has now addressed the billing error and compensated affected customers appropriately
GETTYBen Martin, also identified as director for consumer protection and competition at Ofgem in separate reporting, reiterated the importance of proper billing procedures: "This is particularly important for prepayment meter customers who are more likely to be in financial difficulty."
The case forms part of Ofgem's broader efforts to ensure energy suppliers meet their regulatory obligations.
Octopus Energy disputed the regulator's approach, claiming Ofgem had "spent two years investigating an alleged issue with prepayment meter bills that had zero customer complaints".
Octopus Energy explained that 60 per cent of its prepayment customers do not notify them when moving house
OCTOPUS ENERGYThe company argued that issuing final bills to prepayment customers is "impossible to implement in most cases", noting that 60 per cent of its prepayment customers do not notify them when moving house.
Octopus highlighted practical challenges, stating it only holds bank account details for 10 per cent of prepayment customers and that 70 per cent of refund cheques go uncashed due to missing forwarding addresses.
Rachel Fletcher, director of economics and regulation at Octopus Energy, said: "With energy costs soaring, we'd like to see Ofgem put people over policies. People want lower bills."
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