Reuters/London
The energy regulator yesterday told the country’s main energy suppliers to do more to return over £400mn owed to former customers which is sitting unused in closed accounts.
Ofgem said Britain’s biggest six energy suppliers - Centrica-owned British Gas, SSE, EDF Energy , RWE npower, E.ON and Scottish Power - were holding money paid in credit by customers who then switched suppliers or moved house.
The regulator said the companies were not doing enough to ensure the money was returned to consumers. “When many people are struggling to make ends meet, it is vital that energy companies do the right thing and do all they can to return this money and restore customer trust,” Andrew Wright, interim chief executive of Ofgem, said in a statement.
The energy suppliers hold at least £202mn from closed accounts of former domestic customers and £204mn from former non-domestic customers, the regulator said.
The energy watchdog is understood to believe the delay in returning customers funds discourages millions of people from switching providers, which the government is trying to encourage in an attempt to increase competition and lower prices.
Energy companies have been in the spotlight recently, facing backlash from the public and politicians over price rises.
The affordability of heating homes shot to the top of the political agenda last autumn after opposition Labour leader Ed Miliband promised to freeze energy bills for 20 months if he won power in a 2015 election.
Ofgem said if it was not possible to repay customers, suppliers should find ways to use the money to benefit consumers more widely.
The chief executive of the industry’s representative body, Energy UK, said more often than not, energy suppliers were owed a lot more money than they owe to the customer.
“Energy companies try and make sure individual customers’ money gets back to its rightful owners. However, more commonly energy companies are owed many times more money by people who leave unpaid debts behind them,” Angela Knight said in a statement. She said suppliers stood ready to repay the money where customers provided the necessary details.
The Energy Secretary, Ed Davey, has suggested the big energy companies should be broken up. It is the second time this week that Ofgem has intervened in the energy debate.
On Wednesday the watchdog announced new rules to force suppliers to give a more detailed account of how they trade electricity between their generator business and the part of the company that supplies customers.
Under the new rules firms will have to publish the price at which they will buy and sell on wholesale markets up to two years in advance, or face big fines.
The rules, which come into force on March 31, are designed to address accusations that the Big Six are profiteering by disguising the margins of retail units.