E.on fined £7.8m for overcharging customers

Energy regulator, Ofgem has fined E.On £7.75m for incorrectly charging some customers exit fees and overcharging on bills.

The energy giant has also been ordered to pay back £400,000 to affected customers, with refunds ranging from £8 to £12.

The hefty fine will be paid to Citizens Advice, a community charity that helps vulnerable customers, Ofgem said today in statement.

This isn't the first time E.On has been caught out by the energy regulator. They were fined £12m as recently as May 2014 for miss-selling energy contracts, following an investigation by Ofgem spanning two years. It is estimated half a million households were affected.

Under rules laid out by Ofgem, energy suppliers have to give customers a full 30 days notice of price rises to allow customers to switch supplier if they choose to, before the new charges come into effect.

If a customer signals their intention to switch supplier within 30 days they should not be subject to any exit fees or higher tariff. Eon was found to have billed customers for price rises in January 2013 and January 2014.

"This error and the delay in providing the information is serious and E.On has failed to protect these consumers," Ofgem said, adding that this had been taken this into account in determining the level of penalty.

"The level of penalty package today also reflects that E.On has made the same error previously as well as making senior level commitments that it rectified its processes," the regulator added. "Also taken into account was that E.On notified Ofgem of the billing issues and has cooperated throughout the investigation."

E.On has issued an open apology to customers. "This is not the first time that E.ON has made this error and the company sincerely apologises to those affected." it said.

Eon is now in the process of trackign down customers to provide refunds by the end of April this year. Sarah Harrison, senior partner in charge of enforcement at Ofgem, said: "It is vital that suppliers play by the rules so customers are encouraged to engage in the market.

"E.ON's errors meant customers who took the chance to switch were wrongly charged. It is important that E.ON has repaid potentially affected customers and cooperated with the investigation. However it's absolutely unacceptable that E.ON failed to provide these vital customer protections yet again and this persistent failure is the reason for the high penalty."

In a statement it said: “Following reports from E.ON, Ofgem opened an investigation into the errors in June 2014 and has agreed today’s penalty package in recognition of the company’s errors. These errors meant that some customers were overcharged, although in the majority of cases this was by less than £10.”