UK renewable energy supplier Bulb have asked to pay more than a million pounds to Ofgem for misinterpreting, and failing to comply with the rules set by the industry watchdog.
Thousands of consumers were affected by a number of errors on Bulb’s part, including in the areas of billing, switching, and the use of the Priority Services Register.
Bulb Energy has been fined a total of £1.76 million by UK energy regulator Ofgem, for failing to abide by its rules and regulations governing the energy industry.
Based on the investigations, Bulb was found to have breached rules in three different areas – billing, switching, and the firm’s Priority Services Register between 2017 and 2020.
Some 61,000 customers were affected by the company’s errors. Among the affected customers, 3,800 customers under the Restricted Meter Infrastructure (or RMI – used where there is more than one meter at a property) missed a chance to switch suppliers.
Bulb failed to report the correct number of meters along with the switch request. This meant the customers were not able to change suppliers and missed out on significant savings. Bulb has paid £155,500 to customers affected by this incident.
Additionally, around 11,400 customers on RMI were incorrectly charged on multiple occasions, leading to a total overcharged amount of £699,000. The energy provider has since issued refunds and made additional goodwill payments of £675,000 to affected customers.
About 46,500 of the firm’s vulnerable customers were removed from their network operator’s Priority Service Register from March 2019 to January 2020, due to a fault in Bulb’s system that reported such accounts to be data errors.
The affected vulnerable customers were unable to avail themselves of essential priority services, such as receiving advanced notice during planned power outages. The supplier self-reported this issue to the regulator in February 2020, and compensated the 933 affected customers with a total of £70,000.
The £1.76 million fine also included a £157,000 payment to the redress scheme that supports vulnerable customers.
The energy supplier, which has been operating for five years and has almost 1.7 million customers, failed to uphold the rules set by Ofgem due to ‘insufficient processes’ that check for non-compliance. The breaches could have been prevented if the firm made a move to review its systems and check for errors.
However, Bulb has put measures in place to improve services, including a review of governance, and providing compensation and refunds to the affected customers.
Bulb currently has a 5.7% market share, and was established to challenge the UK’s Big Six energy suppliers. Co-founders Hayden Wood and Amit Gudka established the firm because they were ‘fed-up’ with how the existing energy industry treats its customers.
This issue involving Bulb might come as an embarrassment to its core values, but the immediate effort to rectify their errors and make things right with their customers prevented any enforcement actions by Ofgem.
Jonathan Brearley, the Ofgem CEO, stated that Bulb has overcharged customers and risked leaving vulnerable individuals without access to power and essential services. He added that the rules are set to protect consumers, which means that suppliers have to follow them to ensure that customers are served satisfactorily.
Despite calling the £1.76 million a fine, a comment posted at Smart Energy International stated that the payment was made as an answer to the compliance case. It was provided as a package to the redress fund, along with the goodwill payments and refunds made to customers.
The UK’s energy market was shaken up by the entrance of challenger companies that offer cheaper deals and personalised services. The flurry of new energy firms has made an impact on the UK’s Big Six, namely British Gas, E.ON, Npower, Scottish Power, and SSE.
From only 12 companies in 2010, the energy industry now has around 57 suppliers. Many small suppliers have struggled to stay in the market amid changing market trends.
SSE also exited the market earlier this year, agreeing to a £500 million deal that saw its British supply arm sold to Ovo. At present, Ovo Energy is the third-largest supplier in the country.