UK regulator of electricity and gas markets Ofgem reported on Thursday that following an investigation into switching and renewal processes conducted by British Gas Business, the regulator found that the energy supplier had prevented non-domestic customers from switching to other suppliers and also failed to give notice to approximately 1,200 businesses that their tariffs were about to expire.
Ofgem has ordered British Gas Business to pay GBP5.6m in fines and compensation. The supplier has already paid nearly GBP1.3m to affected business customers and is in the process of contacting and paying back around GBP150,000 to customers who have since moved to other suppliers. If those customers cannot be found, the remaining money will be paid into the Energy Efficiency Fund, along with a further GBP3.45m in recognition of the invalid objections. The fund will provide energy efficiency measures, such as insulation and new boilers, to micro-business customers. British Gas Business will also pay a penalty of GBP800,000.
British Gas Business has fully cooperated throughout Ofgem’s investigations; therefore the level of the settlement package is lower than if the company had not complied with Ofgem’s findings.
The energy watchdog opened investigations into British Gas in 2012 and discovered that around 5.6% of the objections made by British Gas Business to non-domestic customers wanting to switch suppliers were found to be invalid, between 2007 and 2012. This was said to be caused by errors in British Gas Business’s computer systems, as well as inadequate processes and controls that did not detect invalid objections to switches. Ofgem also found that British Gas Business did not effectively communicate the reasons for their objections to the customer switching suppliers and did not advise on how customers could resolve the issues.
A separate investigation into the company’s renewal processes for business customers found that around 1,200 mainly micro-businesses were not properly informed about contract expiry dates, which meant they were unable to shop around for a better deal. The affected businesses either continued on the same terms or were rolled over onto more expensive standard tariff rates.
Sarah Harrison, Ofgem Senior Partner in charge of enforcement stated: “The ability for consumers to switch easily and fairly is key to a well-functioning energy market. In these cases British Gas Business failed these consumers who were wrongly blocked from switching, many of them small businesses, and denied others the chance to switch to a better deal at the end of their contract.”