Ovo Energy has inherited a £1.2m fine months after buying SSE’s home energy supply business after SSE failed to install enough smart meters last year.
The regulator, Ofgem, said Britain’s second largest energy supplier missed its smart meter targets for 2019 before Ovo Energy bought the business for £500m.
Under the government’s smart meter roll-out plans all energy companies are expected to take “all reasonable steps” to fit smart meters in the homes and small businesses they supply by the middle of next year.
The scheme has been dogged by repeated delays to the software infrastructure, which has deterred homes from fitting a smart meter over fears it may stop working if they want to switch to a new supplier.
The outbreak of the coronavirus pandemic has thrown the roll-out further off course, forcing the regulator to push back its annual targets for this year to mid-2021. At the same time the government set a new end date for the scheme of 2024, four years later than first planned.
Industry research published last month by the consultancy Cornwall Energy warned that the full impact of Covid-19 on the smart meter roll-out was still unknown.
“Although installations have begun to pick up as lockdown measures have eased, a return to normal levels is a long way off, the long-term impact on the roll-out is still to be revealed over the coming months and years,” it said.
Energy companies are also likely to face growing financial pressure later this year as customers left without jobs due to the economic fallout of the pandemic begin to default on energy bills.
Ofgem will not take any formal enforcement action after Ovo agreed to pay SSE’s fine.
It comes on top of an £8.9m penalty handed to Ovo weeks after closing the SSE deal, for overcharging its customers and failing to put the issue right as soon as possible.
The regulator said Ovo was aware of the overcharging but did not “self-report” the issue to the regulator. However, Ovo told its customers it had “worked tirelessly” to fix the problem “as soon as we discovered these issues”.
Ovo supplies energy to about 5m homes following the deal to buy SSE’s 3.5m-strong home supply business.
The company was founded in 2009 by Stephen Fitzpatrick, a former banker and Tory donor, who quickly built a high profile for the business based on a commitment to offer better service than the “big six” energy suppliers.