Scottish Power to pay out £1.5m in energy bill compensation for overcharging

Scottish Power is due to pay out £1.5 million in compensation after it overcharged customers for their gas and electricity.

An administrative error meant nearly 1,700 customers faced higher charges than they should have for their energy use. The energy supplier reported itself to regulator Ofgem, with whom it agreed the compensation package.

Scottish Power, which supplies electricity and gas to 4.5 million customers in the UK, has apologised for its error.

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It comes as the Ofgem energy price cap fell more than 12% on 1 April. However, there were hikes to other utility bills, including an above-inflation increase in council tax charges.

How much compensation will Scottish Power customers get? 

Exactly a year ago in April, Scottish Power identified a small percentage of its direct debit customers – roughly 0.04% - had been subjected to higher charges for their energy bills. 

The issue stemmed from incorrectly classifying direct debit customers as standard credit payment customers (i.e. those who pay on receipt of their bill). Usually, these bill payers are charged a slightly higher rate than the direct debit customers under the energy price cap.

This oversight affected 1,699 customers between 2015 and June 2023 who ended up overpaying by an average of £149 on their energy bills. This was spread between 11 price caps and included October 2022, when energy bills were at their worst levels alleviated by the cost of living crisis.

Each affected customer is set to receive compensation packages of around £249 each. 

Scottish Power issued an apology for the oversight. Andrew Ward, CEO 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.”

To make amends, the energy supplier has so far refunded £250,000 and paid out an extra £250,000 in goodwill payments. Customers do not need to apply for a refund as all payments are made automatically.

Scottish Power is making a further £1m payment to Ofgem’s Energy Industry Voluntary Redress Fund. This pot gives money to charities and community projects that aim to help vulnerable customers with their energy needs.

What has Ofgem said? 

m, which agreed Scottish Power’s compensation package, praised the energy supplier for raising the issue itself. It urged suppliers to be “vigilant” and to “act quickly to resolve billing errors that impact customers”.

“Had Scottish Power not self-reported and resolved the issues in a timely manner, the redress package sought would have been considerably higher”, according to Ofgem’s deputy director for price protection, Dan Norton, 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. We will continue to closely monitor all suppliers and will hold them to account if they do not meet the standards we set.”