Ovo Energy Hit with £2.7m Penalty for Late Warm Home Discount Payments
Energy supplier Ovo has been ordered to pay a substantial penalty of £2.7 million after failing to deliver vital government bill support to thousands of vulnerable customers on time. The regulator Ofgem found that the company was almost two years late in passing on Warm Home Discount (WHD) payments, missing a critical deadline in March 2024.
Thousands of Vulnerable Households Left Without Crucial Winter Support
The 19-month delay impacted almost 12,000 customers, including over 7,700 individuals registered on the priority services list who are classed as vulnerable energy consumers. Among these, approximately 4,000 were medically vulnerable, facing heightened risks during the coldest winter months. This failure meant that many low-income households were deprived of the £150 electricity bill rebate they were entitled to, at a time when average annual energy bills approached £2,000.
Neil Lawrence, a director at Ofgem, stated that Ovo fell "significantly short" of its obligations, though he acknowledged the company has since taken "positive steps" to rectify the issue. The delay was attributed to an internal error, prompting Ovo to overhaul its systems to prevent future occurrences.
Compensation Package and Regulatory Response
Ovo will pay a total of £2,765,200 in compensation directly to affected customers. The compensation package includes:
- £150 for all impacted customers
- An additional £150 for medically vulnerable customers
- £100 for each instance where a customer was unable to top up their energy meter between 31 March and 31 May 2024 due to the delayed payment
Lawrence emphasised the importance of timely support, stating: "The warm home discount is a vital source of support for vulnerable energy consumers. Delays of this magnitude can cause real harm, particularly for those experiencing fuel poverty who also have medical needs." He added that Ofgem will continue to intervene where necessary to ensure customers receive the support they are entitled to.
Company Apology and Broader Context
A spokesperson for Ovo expressed regret, saying: "We're very sorry that some customers did not receive their warm home discount payments on time. We have worked closely with Ofgem to understand what went wrong and to put measures in place to ensure it does not happen again." The company admitted it did not meet its own high standards of service and confirmed that all affected customers have now been compensated.
This customer support failure represents another setback for Ovo, which has faced challenges in raising fresh funds from investors to meet the regulator's stricter financial standards. The Warm Home Discount scheme, designed to assist households on low incomes, requires customers to receive at least one benefit, such as housing benefit or jobseeker's allowance, to qualify. Energy companies are responsible for applying the discount directly to electricity bills rather than issuing direct payments to customers.
Ofgem's firm stance underscores its commitment to protecting vulnerable consumers and ensuring energy suppliers adhere to robust processes. The regulator has made it clear that failures of this nature are unacceptable and will result in strong action to safeguard customer interests.
