Why Did Octopus Energy Pay £1.48 Million in Compensation And Could You Be Owed Money?
What happens when a major energy supplier fails to issue final bills on time? For thousands of UK energy customers, this question became reality. A recent investigation by Ofgem, the UK’s energy market regulator, found that Octopus Energy breached key billing regulations by not providing final bills to over 34,000 prepayment meter customers between 2016 and October 2023.
The consequences were significant. Octopus Energy agreed to pay a total of £1.48 million in compensation and refunds, a move designed to put things right for affected customers. But this case isn’t just about one supplier’s mistake. It also highlights the broader importance of billing transparency, customer rights, and regulatory compliance within the UK energy market.
In this guide, we break down what happened, how the compensation was calculated, who is eligible, and what it all means for UK energy consumers moving forward.
What Did Ofgem Find During Its Investigation into Octopus Energy?
Ofgem discovered that Octopus Energy had failed to issue final bills within six weeks of account closures, specifically to customers using prepayment meters (PPMs). This is a direct violation of Standard Licence Condition (SLC) 27.17, which obligates energy suppliers to provide final bills within a six-week timeframe.
More than 34,000 customer accounts were affected, many of whom were considered vulnerable due to their reliance on prepayment energy services.
Despite these customers having visibility of their account balances through their meters, the lack of a formal final bill meant they had no clear record of how much credit was owed or whether any outstanding charges remained.
The issue was uncovered after another energy supplier, E.ON Next, self-reported a similar failure. This led Ofgem to examine other suppliers, ultimately identifying a long-standing issue at Octopus.
While Octopus claimed there had been no direct complaints from customers, the regulator held the supplier accountable for failing to meet its obligations.
Why Are Final Bills So Important for Prepayment Customers?
While most customers expect a final bill when switching providers or closing an account, the significance of this document is even more pronounced for prepayment meter users. These customers, who pay for energy in advance, may have credit remaining on their meters when they move out or change suppliers.
A final bill serves several important purposes:
- It confirms whether the account is in credit or arrears
- It provides a clear record of the final balance
- It allows customers to claim any remaining credit they might not have otherwise received
According to Beth Martin, Ofgem’s Director for Consumer Protection and Competition, final bills are crucial in ensuring that customers reclaim what they’re owed particularly those who are already at greater financial risk.
How Was the £1.48 Million Compensation from Octopus Energy Calculated?
Octopus Energy agreed to pay compensation and redress totalling £1.483 million, distributed among more than 34,000 affected customers. This figure includes:
- £231,000 in unclaimed credit refunds from closed accounts
- £1,250,000 in direct compensation
- An average of £43 per affected customer
In addition, Octopus agreed to voluntarily write off debts held by customers whose accounts were closed during the non-compliance period. While exact figures for this write-off were not disclosed, the gesture formed part of the supplier’s overall response.
Table: Breakdown of Octopus Compensation and Refunds
| Compensation Type | Amount Paid |
| Credit Refunds | £231,000 |
| Customer Compensation | £1,250,000 |
| Average Payment Per Customer | £43 |
| Total Compensation & Redress | £1,483,000 |
Ofgem noted that any unclaimed funds for example, when a customer cannot be contacted after several attempts will be donated to the Energy Industry Voluntary Redress Fund (EIVRS), which supports vulnerable consumers.
What Regulatory Standards Did Octopus Energy Breach?
The investigation concluded that Octopus Energy failed to meet multiple regulatory standards. The most relevant are:
- Standard Licence Condition 27.17: Requires suppliers to send a final bill within six weeks of a contract ending.
- Guaranteed Standards of Performance (GSoP): Regulation 6CA and 8: Requires a £30 compensation payment if a final bill isn’t issued on time, with an additional £30 payment if the first is delayed.
- Standard Licence Condition 5A: Requires suppliers to be open and cooperative with Ofgem, particularly when there is a risk of customer detriment.
From January 2025, GSoP compensation amounts increased from £30 to £40, but the older rate applied during the time Octopus was non-compliant.
Who Is Eligible for Octopus Energy Compensation?
The compensation applied specifically to:
- Prepayment meter customers
- Those who closed their accounts between 2016 and October 2023
- Customers who did not receive a final bill within the six-week period
Octopus Energy has already begun contacting these customers directly. In cases where contact details were outdated or unavailable, a third-party tracing agency was employed to locate them.
Where successful, customers received payment either via:
- Direct deposit or credit to an existing Octopus account
- A cheque sent to their last known address
Any unclaimed funds will be handled by the EIVRS by September 2025, after all reasonable contact attempts have been exhausted.
Has Octopus Energy Resolved the Billing Failures?
Octopus has confirmed that its billing systems have been updated, and additional processes are now in place to ensure:
- Timely final bills are issued to all customers
- Customer accounts are settled with clear visibility of any remaining balances
- Vulnerable customers are prioritised for redress and assistance
Ofgem acknowledged that Octopus has shown a willingness to cooperate, though the regulator has made it clear that ongoing compliance monitoring will continue.
How Does This Affect Octopus Energy’s Reputation as a Supplier?
Despite the billing issues, Octopus Energy remains one of the UK’s most recognised suppliers. With over 7.5 million UK customers and an additional 2.5 million internationally, the company has grown significantly largely due to its acquisition of Bulb in 2022 and Shell’s home energy customers shortly thereafter.
Octopus has built its reputation on customer-centric services, green energy solutions, and innovative platforms like Kraken, its proprietary technology arm. While the billing lapse is a blemish, many observers agree that the supplier’s response has been transparent and constructive.
What Are UK Customers’ Rights Regarding Final Bills and Energy Compensation?
Under Ofgem’s rules, energy customers are entitled to:
- Receive a final bill within six weeks of account closure
- Be compensated £30 if this deadline is missed
- Receive an additional £30 if the compensation itself is not paid within 10 working days
- Be able to escalate complaints to the Energy Ombudsman if the issue is not resolved after 8 weeks
These rules apply equally to credit and prepayment customers, with the latter group often receiving additional regulatory focus due to financial vulnerability.
What Should Customers Do If They Haven’t Received Compensation?
If you believe you’re eligible for compensation but haven’t been contacted:
- Reach out to Octopus Energy’s customer support directly
- Provide your account details and closure date
- Request clarification on whether your account was affected
- If no resolution is reached within eight weeks, escalate the matter to the Energy Ombudsman
Frequently Asked Questions About Octopus Energy and Ofgem Compensation
How will I know if I’m eligible for Octopus Energy’s compensation?
Octopus has contacted all affected customers using available contact information. If unsure, contact their support team for confirmation.
What is the Energy Industry Voluntary Redress Fund?
The EIVRS supports projects aimed at helping vulnerable energy consumers. Any unclaimed compensation from Octopus will be directed here after September 2025.
Was the £1.48 million compensation mandatory or voluntary?
The amount was agreed upon between Octopus and Ofgem as part of a regulatory resolution. Some of the payments, including debt write-offs, were voluntary.
Does this issue affect credit meter customers too?
No, the issue specifically involved prepayment meter customers who didn’t receive final bills on time.
What happens if my cheque expires?
If you’ve received a cheque that’s expired, contact Octopus Energy immediately to request reissuance.
Can I still switch to Octopus after this issue?
Yes. Octopus Energy remains a fully operational and regulated supplier with high customer satisfaction scores.
Are other energy suppliers being investigated?
Yes. The investigation started after a similar issue at E.ON Next. Ofgem has signalled ongoing reviews across the sector.
READ NEXT:
