Regulator to take up to 10% of annual turnover from energy firms that mistreat consumers 

In 2022, the energy regulator received 12,373 complaints and queries from energy and water customers, an increase of 87% on the previous year, driven mainly by queries from electricity users. Picture: iStock

Energy firms that flout their obligations to customers could face fines of up to 10% of their annual turnover, the regulator has said.

The Commission for Regulation of Utilities (CRU) on Tuesday published a decision paper on how to set financial penalties for firms that breach the rules that deliver a “credible deterrence against non-compliance" and ensure “meaningful outcomes” for consumers.

This process “forms an important part of ongoing work to establish a framework to allow the CRU to utilise its powers of investigation and to impose administrative sanctions”, the regulator said.

It said under the relevant legislation, it could impose minor or major sanctions. In the former case, it can issue advice, a caution, warning or reprimand. In the case of major sanctions, it can direct a company to pay up to €50,000 as part of its investigation costs along with up to 10% of the company’s turnover.

“The CRU has been empowered to take actions against licensed electricity and gas suppliers and network companies that do not act in a way that meets the standards of performance which the CRU believes will ensure a high standard of protection for consumers,” it said.

The CRU said it would decide how serious a breach was based on factors such as the number of customers affected, if any vulnerable customers were affected, how much customers lost out financially and the impact on customer confidence in the market.

Aggravated factors could increase the scale of the fine, such as a company not cooperating with CRU’s investigation, repeated offending and the absence of internal mechanisms to prevent the breaches from happening.

However, if a company reports the error itself and takes timely corrective action, these could act as mitigating factors.

Surge in complaints

The new fines system comes at a time when complaints about energy companies to the regulator have surged in recent years.

In 2022, the energy regulator received 12,373 complaints and queries from energy and water customers, an increase of 87% on the previous year, driven mainly by queries from electricity users.

Such is the backlog in complaints, the regulator went out to tender in November for a contract worth over €200,000 for consultants to help clear its backlog of complaints, which have quadrupled in less than two years.

“Due to the high volume of complaints being received, and the increased complexity of individual complaints, there is currently a backlog of cases waiting to be investigated by investigating officers,” it said.

CRU plans to spend up to €212,000 from this month on “specialist external support” to investigate complaints and reduce the backlog.

In October 2023, the CRU revealed an estimated 48,000 Electric Ireland customers were overcharged on their electricity and gas bills, with some granted compensation.

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While CRU said Electric Ireland acted in “good faith” and it did not appear to be a “deliberate breach”, it felt the energy company “could have enhanced its business process” to prevent it from happening.

This new regime for fines remains out for consultation to stakeholders in the industry until mid-February.