Energy regulator Ofgem has today given OVO Energy the all clear to continue offering Direct Debit customers monthly interest reward payments on gas and electricity accounts in credit.
OVO, one of the fastest growing independent suppliers in the UK, had been paying out a 3% interest reward to customers since July 2010. In March this year however, Ofgem informed OVO that this went against a new licence condition introduced as part of the regulator’s Retail Market Review.
The regulator asked OVO to either remove the 3% interest or apply for a ‘derogation’ for formal permission to continue. The derogation application was submitted in August and Ofgem announced yesterday that it had been approved.
OVO Energy has nearly 350,000 energy accounts eligible for interest reward payments on their credit balances and has paid out over £1.3 million in interest rewards to these customers in 2014.* They are still the only energy company to reward customers for remaining in credit.
Jessica Lennard, Head of Corporate affairs at OVO Energy explains:
“We set out to make the energy market a fairer, happier place for customers and the interest reward is something they have always told us is really important to them, so we were committed to fighting for it.
“Regulations should work in customers’ best interests, but it never felt right to us that the rules allow a supplier to charge interest when an account is in debit, but not reward customers when they are in credit. We welcome the pragmatic, fair decision Ofgem has made in this case.”
Media contacts: Shula Smith | Head of PR and Communications | 07863 342317
*Figures cover 1st January 2014 – 1 November 2014
OVO Energy estimates how much gas and electricity a customer will use during the year and then splits this into 12 equal payments. Then 3% interest reward is paid on customer account balances that remain in credit after OVO Energy has calculated their bill.
When OVO Energy sets up a customer’s statement, it will credit the account with 3% OVO Interest Reward for the number of days between statements. Divide the number of days between statements by 365, then multiply that by three to see what percentage the customer will get each time.
Our T&Cs prevent customers from using their OVO account to build up credit balances simply to gain interest.
We refund all balances on request as long as it leaves enough to pay for next month's energy.
In the last six months we have proactively reviewed down 33,000 direct debits.
Standard time for refunds is 7-10 days but if a customer needs it faster we obviously do all we can to accommodate this.
Sunday Times Virgin Fast Track 100 league table ranked Ovo Energy as Britain’s 10th fastest-growing private company, and the top company in the South West region.
About OVO Energy
Headquartered in Bristol, OVO Energy is one of the leading independent suppliers in the UK retail market. Since it entered the market in 2009, it’s grown to 400,000 customers (720,000 customer accounts), created over 600 jobs and is currently recruiting for over 120 more.
OVO’s guiding principles are simplicity, transparency and fairness in all of its operations: make the energy industry easier for consumers to understand and make sure prices reflect the actual cost of doing business so customers know they’re getting a good deal.