Ovo Energy has agreed to pay more than £10m after the energy regulator for Great Britain, Ofgem, found a lack of monitoring of vulnerable customers with prepayment meters (PPMs) could have exposed them to a “clear risk of harm”.

Ofgem found that Ovo did not adequately monitor its PPM customers, including those on the priority services register, leading to breaches of the watchdog’s rules designed to protect customers in vulnerable situations. ​​

In response to the findings, Ovo agreed to a settlement package including a £7m payment to Ofgem’s voluntary redress fund as well as a £3.4m package of credit and debt relief for some of its most vulnerable customers, which the regulator said was in lieu of compensation.

Any Ovo customers who are due to receive credit or debt write-off payments will be contacted by Ovo and do not need to take any action, Ofgem added.

In addition, Ovo – set up by the former Tory donor Stephen Fitzpatrick – is in the process of paying £1.1m to customers in the Scottish Highlands and islands, after compliance work by the regulator found that some rural customers did not have appropriate access to engineer support for more than two years, from 1 January 2022 to 1 April 2024.

During Ofgem’s investigation into Ovo, the company took some action to support vulnerable customers, including making welfare visits to people who had been disconnected from their energy supply for more than 72 hours and who had not responded to any communications during that time. In some cases, customers who had run out of credit were not contacted by the energy supplier.

Ofgem’s investigation looked into Ovo’s treatment of its existing PPM customers rather than customers having PPMs installed without their consent.

“It is clear that Ovo fell short in its support of vulnerable PPM customers, and it’s right that they’ve taken action to improve their processes,” said Cathryn Scott, the director of market oversight and enforcement for Ofgem.

“Prepayment meters are a positive choice for many customers, helping them stay in control of their energy use and reporting high levels of satisfaction – but it’s not suitable for everyone and strong monitoring must be in place to protect vulnerable consumers.”

Ovo said in a statement that it accepted that some of its historic processes fell short of the expected standards. It added that since 2024 it had significantly improved its policies, systems and training, and how its policies are followed, including implementing a new policy around how it identifies and supports vulnerable customers.

An Ovo spokesperson said: “Ofgem’s investigation examined how we supported prepayment meter customers between 2018 and 2024. We accept that some of our historic processes fell short of expected standards, and we are sorry for that.

“Keeping our customers safe and supported is hugely important to us and we recognise there were areas where we needed to do better.”

Ovo’s settlement is the latest blow for the company, which was fined £2.7m in January after failing to pass on government support payments for winter energy bills to thousands of vulnerable customers during the energy cost crisis.

The German energy group E.ON said last month it had agreed to buy Ovo in a deal that would create Britain’s biggest gas and electricity supplier by number of households served.