Ofgem fines E.ON £7 million for failing to meet smart meter provision deadline

UK independent energy regulator Ofgem revealed on Monday that energy supplier E.ON is to pay a GBP7m penalty for failing to supply advanced meters by the April 2014 deadline, following an investigation into E.ON’s compliance with its obligations under the electricity supply licence (Standard Licence Condition 12).

An advanced meter roll-out scheme for businesses was started by the UK government in 2009, but Ofgem said E.ON delivered advanced meters to fewer than 65% of its relevant electricity business customers by the deadline, despite being given five years to fit advanced electricity supply meters to around 20,000 customers. The scheme is part of a national project to modernise the energy sector and provide better service by introducing next-generation, smarter meters to help customers control their usage and bills.

E.ON only completed 64.4% of its roll-out by April 2014, which meant that more than 7,000 customers were not provided with a new advanced meter on time. The company was unable to prove that it took all reasonable steps to fulfil its required meter rollout. It did not plan and monitor its roll-out and its senior management failed to do enough to ensure the company was in compliance.

Ofgem also found that E.ON gained financially by avoiding the costs of installing and operating the new meters. The company will pay GBP7m to the Carbon Trust and has also agreed to pay a further GBP7m in redress if it fails to meet a new interim target within the next year. Further progress is said to have been made by E.ON since April 2014, however, the supplier has accepted it needs to do more. If E.ON is still not compliant with its obligations after a further six months, Ofgem stated that it is prepared to consider imposing a sales ban preventing E.ON from taking on new business customers until it is able to supply them through an advanced meter.

Anthony Pygram, Ofgem senior partner with responsibility for enforcement commented: “It’s unacceptable that E.ON failed to roll out advanced meters to these business customers on time. Customers have lost out on receiving better information about their energy consumption and the opportunity to control costs. Unless E.ON improves their poor record, they will have to pay out even more and may face a sales ban.

“The roll-out of advanced meters has the potential to transform the energy market. We expect all suppliers to learn the lessons from this ahead of the domestic smart-meter roll-out, in particular the need to start the process in good time and ensure senior managers are committed to delivering on time.”

E.ON issued an apology for missing business electricity meter change deadline on Monday

A spokesman for E.ON stated: “Installing advanced meters to tens of thousands of business customers across the country was always going to be a significant challenge and one that threw up a variety of hurdles for suppliers to overcome. That said, we cannot, and will not, overlook the fact that we did not do enough in time to meet the deadline and in that regard failed to provide the efficient service our business customers demand and deserve.

“In the last 18 months we have made some further progress and we have invested heavily in increasing our capability and we are taking all reasonable steps to get these meters installed.”