Energy customers could receive repeat compensation payments when serious problems with their fuel supplier continue for a prolonged period under plans being considered by Ofgem.
The energy regulator is reviewing the Guaranteed Standards of Performance (GSOP), which set minimum standards suppliers must meet when dealing with customers.
Suppliers currently have to automatically pay £40 compensation when they fail to meet certain standards, including rules covering final bills and refunds of credit balances. However, Ofgem is considering further changes to the system, including linking compensation payments to inflation and introducing repeat payments for some of the most serious failures.
Government response to Commons question
The proposals have now been highlighted by the UK Government in a written response to a question in the House of Commons.
Kevin Bonavia asked the Department for Energy Security and Net Zero whether it would take steps to ensure energy companies provide automatic refunds to customers in a timely manner.
Energy minister Polly Billington said the Government expects suppliers to refund customers promptly whenever money is owed.
She said: “Ofgem already requires automatic compensation in specific cases, including late final bills and late credit balance refunds.
“The Government will continue supporting Ofgem’s review of Guaranteed Standards of Performance (GSOP) payments including proposals for inflation-linked compensation and repeat payments for prolonged serious failures.”
How automatic compensation works
Ofgem's supplier Guaranteed Standards of Performance set minimum service standards that energy companies must meet.
Online guidance from the regulator states suppliers must pay £40 automatically to affected customers when they fail to meet one of the standards.
These cover areas including making and keeping appointments, completing supplier switches, and issuing final bills and refunding former customers' credit balances.
In some circumstances, customers can receive another compensation payment if their supplier fails to pay the original compensation within the required period.
Ofgem increased the standard payment from £30 to £40 following an earlier review to account for inflation.
Wider review of supplier standards
It launched a wider review of the supplier standards last November, saying the rules had not been fully reviewed since 2015.
The regulator subsequently incorporated the work into its wider plans for improving consumer outcomes in the energy market.
Ofgem said in its latest consultation it wanted feedback on potential changes to the way GSOP payments are designed, including possible inflation-linked increases and provisions for repeat compensation payments for the most serious breaches.
The consultation closed on August 19.
The regulator is also looking more broadly at the experience customers receive from suppliers, beginning with billing.
Ofgem said the existing guaranteed standards would continue to play a role in ensuring consumers receive compensation when specific minimum standards are not met.
The latest Commons response also comes as the Government considers wider changes intended to strengthen Ofgem's role as a consumer regulator.
Ms Billington said reforms include stronger powers to enforce consumer law directly and help ensure customers receive money they are owed.
