Utilita was ordered to pay penalty totaling £560 000 for energy switching ban. OFGEM regulatory announced that company’s actions were unacceptable. Energy provider admitted its failure and promised to pay to every customer who lost out financially.
One of the British energy provider, Utilita, which supplies pre-payment energy, has been fined £560 000 for preventing its customers from switching their energy supplier. The act of infringing was revealed by OFGEM (Office of Gas and Electricity Markets).
OFGEM is a non-ministerial government agency that aims to protect the energy consumers’ interests. The main rule of this institution is to maintain competitive energy market and uphold the citizens’ right to choose and switch the energy provider of their own free will. Consequently, OFGEM is entitled to conduct congruent investigations. Since Utilita has violated this rule, OFGEM has hit the company with a penalty.
The investigation was initiated by OFGEM as this government organization was informed about limited competitiveness of domestic energy market. Moreover, a great amount of customers complained about restriction, made by Utilita, and unreasonably high prices of its services. The investigation results were surprising.
Britain’s energy regulator revealed that this pre-payment energy provider had prevented approximately 40 000 customers from switching to the rival suppliers. It turned out that Utilita had been blocking its clients’ right of choice during a protracted period of time – between June of 2010 and May 2015.
Utilita used different ways of prevention, for instance, by breaking fix term contracts with those customers, who decided to transfer to another pre-payment energy provider, in an inappropriate way. Moreover, company gave no written information to clients explaining why they had been blocked and how this problem could be resolved.
OFGEM'S Senior Partner with Responsibility for Enforcement, Antony Pygram, underlined that such actions of an energy company are unacceptable, because they lead to the failure of fundamental principles of domestic energy market maintenance.
In this case, Utilita made public apology. The company’s representative announced that Utilita apologized unreservedly to those customers, who during those five years had been wrongly prevented from switching their energy provider. She also laid stress on that fact that every client was vitally important for the company and every affected customer would be paid an indemnity. Moreover, company’s representative promised that every blocked client would be contacted within the shortest possible time in order to assure them that prevention from the switch no more existed.
Consequently, Utilita was ordered to pay a total £560 000 penalty. Affected customer will receive £110 000 and the rest of the amount will be paid to the debt charity StepChange.
StepChange Debt Charity is British charitable organization, which offers help in terms of impartial debt advice and free practical solutions of the debt issues.
Originally, Utilita had to pay bigger penalty. However, according to OFGEM’s claim, the company was working thoroughly with the prosecution. It made a great impact on final decision, and penalty amount was consequently reduced.
It is also interesting that Utilita was revealed as Scottish League Cup sponsor the same day it was hit with a huge fine. It is a football competition that was previously sponsored by Coca-Cola, Skol Lager, Bell's whisky, Co-operative Insurance and QTS Group. Utilita executed a contract with the Scottish Professional Football League totaling £200 000. This sponsorship is to be valid till the summer 2016.
Utilita Energy is Britain’s leading independent provider of prepayment energy. Company was established in 2003 and supplies both gas and electricity. It aims to offer high-qualified energy and maintain competitive prices. Utilita Energy positions itself as the first company on Britain’s market, which supplies smart pre-paid energy at a low price.
