Powergen fined over unfair policy

One of UK’s leading gas and electricity suppliers, Powergen, has been fined £700,000 ($1.3m USD) for preventing more than 20,000 domestic energy customers from switching to new gas or electricity suppliers.

The penalty comes after a 10-month investigation by energy regulator Ofgem which consumer watchdog Energywatch has said was the biggest such fine.

Powergen was found to have prevented direct debit customers with arrears from switching energy supplier.

Ofgem said Powergen had now revised its customer switching procedures.

Direct debit and pre-payment customers were not allowed to switch to another supplier while their account was in arrears.

Powergen told customers that they must clear their arrears or else they would not be allowed to switch.

However, under Ofgem rules Powergen should have allowed consumers to switch providers and then clear their account arrears.

Powergen, which has six million customers, said the mistake had been caused by an error in a part of its credit management operations.

Powergen said it was unlikely that it would appeal against the ruling and that it had written to all customers involved.

The firm said that a small number of customers had been paid compensation, averaging around £20.

Consumer watchdog Energywatch said that the Ofgem fine was more than three times greater than any other levied for a similar offence.