Scottish Power to pay out £1.5m for overcharging customers above energy price cap

Scottish Power is to pay customers £1.5m in refunds and compensation after it charged them above the price cap during the height of the energy crisis.

The energy firm charged 1,699 direct debit customers a higher rate between 2015 and 2023 – across 11 price cap periods – which should only have applied to those who pay by standard credit, or on receiving a bill.

The average amount Scottish Power overcharged during this period was £149 per customer.

Ofgem said Scottish Power is paying a total of £250,000 in direct refunds to affected customers as well as another £250,000 in goodwill payments, equating to an average of £294 per customer.

All payments will be made automatically, and customers do not need to do anything.

Ofgem said Scottish Power reported itself to the regulator last summer, when it discovered that operational errors had led to the mistake.

Scottish Power has also agreed to pay £1m to Ofgem’s Energy Industry Voluntary Redress Fund, which benefits charities and community projects that help vulnerable customers with energy-related support.

Dan Norton, Ofgem’s deputy director for price protection, said: “The last few years have been challenging enough for energy customers facing increasing cost-of-living pressures, without the additional hardship of being overcharged. The price cap is there to protect consumers, and we take seriously any breaches of the safeguards we have put in place.

“Suppliers must be vigilant and act quickly to resolve billing errors that impact customers. We will continue to closely monitor all suppliers and will hold them to account if they do not meet the standards we set.”

Scottish Power said it has put additional controls and monitoring in place to reduce the risk of anything similar happening in future.

Andrew Ward, chief executive of Scottish Power’s customer business, said: “We’re so sorry that a very small number of our customers were affected by this mistake and faced an increased financial burden – especially during a time when energy prices were reaching an unprecedented high and the Government had to step in to provide support.

“Looking after our customers is at the heart of everything we do and our immediate notification to the regulator, swift corrective action and the compensation package agreed with Ofgem show both how seriously we take this matter and our commitment to making it right.”

Which? director of policy and advocacy Rocio Concha said: “With many households still struggling to afford their energy bills and the price cap significantly higher than it was before the energy crisis, suppliers need to ensure that billing is accurate and that customers are easily able to get in touch with customer service if something goes wrong.

“While many consumers will rightly consider switching, Scottish Power must urgently make improvements to ensure all customers are getting the service and support they need and deserve.”