Is it a fine? Is it a penalty? No, it's EDF's mystery Ofgem payment

Stat of the day: £4.5m. The amount that energy provider EDF is paying to customers and the Citizens Advice Energy Best Deal campaign, after an investigation by Ofgem.

by Rebecca Burn-Callander
Last Updated: 09 Oct 2013

The firm vigorously denies that this is a fine, although £1 out of the £4.5m package is listed as a penantly payment (MT doubts that £1 can truly penalise anybody). Oh no, EDF is donating £50 to 70,000 'vulnerable' customers, totalling £3.5m, out of the kindness of its own heart.

Of course, there is the small matter of some unusual selling practices at the energy company. Ofgem found that EDF's contract terms and the ins and outs of its direct debit system were almost impenetrable and that customers had ended up paying much more than the figures bandied around by telesales agents. This happens when you open a call with a promise to save money before you even know what the person on the end of the line is paying...

EDF Energy spokesman Martin Lawrence said: 'We are obviously disappointed that we failed to live up to the high standards that we expect of ourselves. As soon as the issue was identified we immediately took action to satisfy ourselves that we are fully compliant.' Nicely said, Martin.

So, EDF's 'not a fine but a payment nevertheless' includes:

  • £50 to each of the 70,000 households that received the Warm Homes Discount
  • A payment of £1m to the Citizens Advice Energy Best Deal campaign, which raises awareness among customers on how to get the best energy tariff

Ofgem has been much less reserved on the subject of this 'fine'. It says that said it has accepted EDF's offer of a package in place of a penalty. This is a slightly unusual decision, gievn that a fine would have raised a far greater amount for the Treasury. But EDF's offer does directly benefit the people who have been stung by their less-than-transparent sales methods.

It may not be the only energy player dishing out mea culpas either. Ofgem is investigating rivals Scottish Power, Scottish and Southern Energy, and Npower as we speak. If Ogem finds more signs of wrongdoing it could be a cold, cold summer for the energy giants.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Subscribe

Get your essential reading delivered. Subscribe to Management Today