Making things right

We inadvertently charged about 2% of our customers (19,000) an average of £3.04 too much for their energy.

How did it happen?

These customers’ tariffs had come to an end, and when they didn’t select another tariff, they were rolled onto our ‘default’ Flexible tariff. Shortly after they were moved onto this tariff, they chose to switch to a different tariff or supplier. According to the regulator Ofgem’s ‘price protect’ rule, we should’ve honoured whichever of the two tariffs was cheapest throughout the whole switch period.

For example a customer on our Flexible (variable) tariff who’d chosen to switch to another supplier after their tariff rates increased should have been offered a ‘price protection’ window, honouring their original price until they’d completely switched away.

As a result, these customers ended up on slightly higher tariffs for a few days throughout their switching period. Because Octopus doesn't use "tease and squeeze" pricing, the differences were small. Indeed, from time to time, the flexible is cheaper so this rule doesn't even apply to Octopus at these times.

This is a complex rule as it requires retrospective price reductions, and because Octopus don't rely on tease and squeeze pricing its impact in our world is so small that it's easily missed. Indeed, in addition to our own compliance, we pay industry experts to do thorough audits of how we meet regulatory rules and they missed it too.

What have we done to make it up to these customers?

We noticed this mistake ourselves some time ago, checked through all our customers and identified exactly who had overpaid. We calculated how much they were owed, doubled it as a gesture of goodwill, and refunded everyone.

Ofgem subsequently looked at all energy companies to ensure they’ve been offering customers a price protection window.

We were one of 18 suppliers who got it wrong. In total, we refunded £120,000 (over half of which was made up of goodwill compensation). The total across all 18 affected companies was £7,200,000. This demonstrates the extent to which the Octopus error was rather smaller than typical, but we're still glad we found it and fixed, and sorry it happened.

What have we done to fix it?

Our tech team built extra protections into our energy platform to ensure customers will always receive a price protection window while they’re switching tariffs or suppliers, so this won’t happen again.