Small energy provider iSupply have been sanctioned by Ofgem to pay a fine of £1.5 million, for overcharging customers for their energy and hiding it from the regulatory body.
The firm has agreed to pay into the regulator’s voluntary redress fund, which is used to encourage innovation and distribute donations to various charities.
A whistleblower was instrumental in exposing iSupply to Ofgem back in August, stating that iSupply Energy overcharged about 4,400 customers, given that a new price cap had been implemented at that time.
The energy price cap took effect in January, which meant that suppliers were prohibited from charging customers under the default tariff above £1,137 per year per household use.
The preliminary cap started in January and lasted until March, after which it was raised once more to £1,254.
However, it was revealed that iSupply didn’t take heed of the initial cap and charged £36,270 more than allowed. It again violated the succeeding cap, overcharging 25 customers by £53.
In March of 2018, iSupply announced that it was increasing its iVariable tariff, the standard tariff applied automatically after a fixed deal ends. The firm raised the value to £1,090 per year from £1,040. Around 16,500 customers were believed to have been hit by the hike.
iSupply Managing Director Rob Gildert mentioned in a statement that only 9% of their customer base had been affected, which they claim is fewer than those affected by price hikes under the Big Six.
Fast forward to January 2019 when the starting price cap was implemented, which iSupply has been found to have breached by overcharging 4,400 of its customers.
During the Ofgem investigation, it was revealed that the company’s compliance processes and governance lacked effectiveness to prevent the issue from happening. Ofgem believes that the energy firm’s senior employees knew of the breach but did not report it to the regulating body. It took a whistleblower for Ofgem to find out instead.
The regulator also noted the firm’s failure to correct tariffs or issue refunds for customers on time.
iSupply Co-Chief Executive Monica Collings expressed disappointment that their company fell short of providing high-quality service to its customers during that time.
The £1.5 million fine will be paid into Ofgem’s voluntary redress fund, and the energy provider has since issued refunds and compensation to its affected customers.
The price cap has since decreased in October 2019 and is set to be reviewed in April 2020 regarding another change.
Ofgem criticised iSupply, particularly its senior staff, for ignoring the breaches back in January and failing to report the matter or act on it promptly.
The regulating body was disappointed by the fact that it took a whistleblower to inform them about the matter in August, several months after the offenses took place.
Any non-compliance to Ofgem’s default cap is frowned upon but in general, companies that self-report any failing on their part are treated more favourably than those that don’t.
iSupply has earned the scorn of the regulator because its compliance processes were discovered to be lacking, which was exacerbated by the overcharging issue on the initial breach.
Ofgem notes that iSupply has taken steps to improve processes. The regulator intends to invest in the firm to ensure that no similar issues reoccur later.
The regulator is examining consultation responses for existing energy suppliers regarding the new set of rules to keep their customer service and financial health in a good state as they expand.
iSupply is a small energy supplier that offers 100% renewable electricity to its customers under every energy plan. It also has a 100% carbon offset feature on its natural gas for fixed deal tariffs. The company is headquartered in Bournemouth, and has operated since 2012.
iSupply acquired Vattenfall, a Swedish energy firm, back in 2017 and is operating it as a subsidiary.
The latest estimate of iSupply customers dates from when the firm acquired Vattenfall, reporting a 120,000-customer base.