Co-Operative Energy is paying £1.8m in compensation for a series of customer service failings, after becoming the latest gas and electricity supplier to suffer problems with a new IT system.
The sum equates to an average of just £7 for each of the 260,000 customers who were affected by the problems, which followed the introduction of the new system in March 2015.
The payout nevertheless represents a sizeable hit for the small supplier, which saw its pre-tax profits for the year ended January 2016 collapse by 85pc to £941,000 due to the costs of dealing with the billing fiasco.
Energy regulator Ofgem said Co-Op Energy had “let customers down in its complaints resolution, call handling and billing processes”.
Problems included customers being left unable to log into their accounts online, bills being delayed and direct debit updates being stopped.
The supplier also took too long to resolve customer complaints, Ofgem said.
The problems appear to have affected almost all of Co-Op Energy’s customers, with company accounts showing it only supplied a total of 229,000 customers as of January – up from 213,000 a year before.
High turnover of customers would mean more people could be affected by the glitches than were supplied by the firm at any one time.
However, Ofgem said Co-Op Energy had since worked with the regulator to “restore customer service levels” as well as compensate those affected.
The supplier’s billing failings follow high profile problems caused by new IT systems at Big Six giants Npower and ScottishPower, which were fined £26m and £18m respectively for their failings.
Co-Op Energy is one of a raft of small suppliers that have eaten into the market share of the Big Six in recent years but have encountered problems with their customer service as they have grow.
About £1.6m of Co-Op Energy’s £1.8m compensation package has already been paid out and the supplier had “given assurances that adequate processes and systems are now in place,” Ofgem said.
Martin Crouch, senior partner at Ofgem, said: “While customers experienced unacceptable levels of service, Co-operative Energy has done the right thing by taking responsibility for the situation and paying out compensation to those people affected.
“If trust is to be restored in the energy market suppliers must make amends to their customers when things go wrong.”
Ben Reid, chief executive of Midcounties Co-operative said: “As the UK’s only member-owned energy supplier, we put our customers at the heart of everything we do and their interests first.
“We have apologised to those customers who were affected by the problems we experienced when we introduced a new IT system last year. The system issues are now resolved and we have made significant improvements to our service.”
Co-Operative Energy’s accounts show its profits last year slumped “as a direct consequence of the launch of the new billing system, resulting in additional personal costs in order to ensure sufficient resource was in place to resolve customer and billing system issues”.