Octopus Energy Fined £1.5m by Ofgem: How Much Will Customers Get?

Octopus Energy has been ordered to pay £1.5 million following a breach identified by Ofgem, the UK's energy regulator. The penalty relates to failures in issuing final bills to thousands of prepayment customers over more than seven years. Despite the ruling, the company maintains that no customers complained about the payment setup.

Ofgem Identifies Billing Failures Affecting Thousands

Ofgem found that Octopus Energy did not issue final bills to around 34,000 prepayment meter customers who ended their contracts between 2016 and October 2023. This breached regulatory rules requiring final bills within six weeks and refunding any credit within ten working days.

As a result, Octopus has been directed to pay a total of £1.5 million (approximately $2 million), which includes:

• £1.25 million ($1.7 million) in compensation, averaging £43 ($58) per customer
• £231,000 ($314,000) in unclaimed credit on closed accounts

The regulator noted that such issues are especially serious for vulnerable customers, many of whom rely on prepayment meters and are more likely to face financial hardship.

Octopus Energy Responds, Cites Operational Issues

As reported by The Guardian, Octopus Energy said it received no customer complaints related to the billing failures. The company blamed the issue on logistical challenges, noting that 60% of prepayment customers did not notify them when moving and only 10% provided bank details, leading to many uncashed cheques.

Octopus added that its prepayment rates were £70 ($95) below the price cap, saving customers over £7 million ($95 million).

Rachel Fletcher, Director of Economics and Regulation, stated:

'With energy costs soaring, we'd like to see Ofgem put people over policies.'

Broader Enforcement Across the Energy Sector

Octopus Energy is among several UK suppliers penalised for billing failures, paying £1.5 million (about $2 million), while E.ON Next and Good Energy have paid a combined £14.65 million (approximately $20 million) in compensation for similar issues affecting prepayment customers.

In May 2025, Ofgem ordered ten suppliers, including Octopus, to return £7 million ($9.5 million) after overcharging standing charges between January 2019 and September 2024.

These actions reflect Ofgem's ongoing efforts to strengthen consumer protection and ensure billing accuracy across the UK energy market

What Customers Need to Know

Octopus Energy has confirmed it is contacting affected customers. Those eligible will receive compensation via bank transfer or cheque by September 2025, with no application needed.

Customers are encouraged to ensure their contact and banking details are up to date. Updates can be made through their online account portal or by reaching out to Octopus directly, especially if they've moved or changed banks.

In addition to processing refunds, Octopus offers support for those struggling with energy costs. Customers can use the Balance Forecast tool to manage monthly payments, explore lower-cost tariff options, or switch to Direct Debit to save around £93 ($126) a year. Installing a smart meter can also unlock rewards and energy-saving schemes.

Any unclaimed funds will be redirected to the Energy Industry Voluntary Redress Fund, supporting vulnerable households through grants and community initiatives.

Continued Regulatory Oversight

This latest action highlights Ofgem's continued focus on enforcing compliance across the energy sector. The regulator is monitoring supplier performance, particularly on billing accuracy, refund timelines, and prepayment customer support.

Ofgem has warned that companies must address billing issues proactively and improve communication with customers. The case reflects growing regulatory scrutiny and reinforces the need for transparent, accurate billing under current UK energy regulations.