Octopus Energy pays out £1.5million to customers after major billing error

Octopus Energy has paid out almost £1.5million to customers following a major billing error.

An investigation by Ofgem found over 34,000 prepayment meter customer did not receive final bills within six weeks, as required by the energy regulator.

Ofgem said Octopus customers were impacted between 2014 and October 2023. Octopus agreed to pay a total of £1.483million in compensation and redress.

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. The average sum paid to each customer was £43.

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The payments have been made to customer accounts or by cheques have been sent. It is expected that all contactable customers will receive refunds or compensation by September.

If a customer can’t be contacted, the money will be paid to the Energy Industry Voluntary Redress Fund (EIVRS) which funds projects and schemes to support struggling households.

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.

“This is particularly important for prepayment meter customers who are more likely to be in financial difficulty.

“We are pleased that Octopus has now rectified the error and put things right with its customers, offering both refunds and compensation where it’s due.

“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.”

Octopus said it voluntarily wrote off debt held by affected customers, and it has also updated its billing process following the investigation. The energy firm said it also charged prepay customers around £70 below the price cap.

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.”

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