10th Apr 2014 08:24
LONDON (Alliance News) - Centrica PLC-owned British Gas has been forced to make GBP5.6 million in payments following errors in its switching and renewal process.
The UK energy regulator Ofgem found that the energy supplier wrongly blocked businesses from switching and failed to give some businesses notice that their contract was due to end.
Ofgem said that British Gas has already paid back nearly GBP1.3 million to affected customers and will now pay back a further GBP3.5 million into an energy efficiency fund and a GBP800,000 penalty.
The regulator found that between 2007 and 2012 around 5.6% of the objections made by British Gas Business to non-domestic customers wanting to switch suppliers were invalid due to problems in the company's computer systems, along with inadequate processes and controls in place to detect when objections to switches were invalid.
It also said that British Gas did not properly communicate to customers the reasons for their objections to switching and how customers could resolve this.
Ofgem said that in a separate investigation, it found that the business failed to give notice to around 1,200 business customers that their tariff was about to expire, meaning that customers were denied the opportunity to shop around for a better deal and instead either continued on the same terms or were rolled over onto standard tariff rates, which were more expensive than their previous contract.
"We?re sorry these errors occurred and have worked swiftly to change our computer systems and processes, putting controls in place to stop this happening again," British Gas Managing Director Stephen Beynon said in a response provided to Alliance News.
"We take any failure to meet our obligations very seriously and will ensure that the new energy efficiency fund we have set up will be a real help to hundreds of small businesses. It will provide free expert advice and energy efficiency measures, such as new boilers, lighting and renewable energy, to help firms to manage their energy consumption and bills over the long-term," he added.
Ofgem said that British Gas cooperated fully throughout the two investigations and said that the settlement package reflects this cooperation, as it would have been significantly higher if this had not been the case.
"British Gas Business fully accepts its failings, has stopped the practices and corrected its processes to prevent this happening again," Ofgem senior partner in charge of enforcement Sarah Harrison said in a statement. "The company has taken responsibility for its actions and this package strikes a balance of penalty for the company and redress for affected consumers."
The news comes weeks after Ofgem proposed an independent investigation into the UK's energy market by the Competition and Markets Authority, asking the CMA to investigate "once and for all" whether there are barriers to effective competition with the "Big Six" suppliers.
At the time, Ofgem said growing profits, coupled with price hikes, have intensified public distrust of suppliers and highlight the need for a market investigation "to clear the air", with the investigation expected to reassure consumers and complement Ofgem's reforms for a simpler, clearer and fairer energy market.
The Big Six energy firms are British Gas, E.ON, EDF, Npower, ScottishPower and SSE PLC.
Centrica shares were down 1.0% to 334.37 pence, putting it in the top three FTSE 100 fallers in early trading Thursday.
By Tom McIvor; [email protected]; @TomMcIvor1
Copyright © 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
CentricaSSE