Office of Gas and Electricity Markets (Ofgem)

7. Mrs X complains about Ofgem’s contention that she has been overpaid money as part of her participation in its Non-Domestic Renewable Heat Incentive (NDRHI) scheme. She also complains about Ofgem’s decision to recover this money from her.

8. She further complains about Ofgem’s communication of this overpayment. She said that, had she been made aware of Ofgem’s concerns earlier, in particular, following a site audit conducted in February 2020, the overpayment amount would and should have been much lower.

9. Mrs X says that the sudden notification of a substantial overpayment, coupled with the request for immediate repayment, caused severe and profound shock, and significant distress and anxiety. At the time, Mrs X says that she had recently lost her husband, was undergoing cancer-related operations and faced potential legal action. She says she has been left to manage the difficult situation of finding funds she no longer has to repay the overpayment.

10. By bringing her complaint to us, Mrs X is seeking a financial remedy, and for Ofgem to consider the impact of not identifying the issue in the original audit.

25. To help put this complaint, and our decision, into context, it might to helpful to say more about the Non-Domestic Renewable Heat Incentive (NDRHI) scheme and Ofgem’s role and responsibilities with regards to this.

26. The NDRHI scheme, is a government scheme administered by Ofgem, aimed at encouraging businesses, public sector bodies and non-profit organisations in the UK to adopt renewable, or low-carbon heating technologies. It is now closed to new applicants. Participants with accredited installations receive quarterly payments for up to 20 years, based on the amount of eligible heat generated. The scheme covers a range of installations, from small scale non-domestic systems, to much larger commercial setups. The operation of the scheme is governed by the Renewable Heat Incentive Regulations 2018 (the 2018 Regulations) with detailed guidance available on Ofgem’s website.

27. As part of its responsibility for overseeing the scheme, Ofgem sometimes arrange for audits to be carried out at the participant’s property. This is to ensure participants are continuing to comply with the scheme’s rules. Ofgem select participants for audit based on a variety of factors including random sampling. It makes clear that anyone can be selected for an audit check at any time.

28. Site audits are carried out by external contractors (that is, not Ofgem staff) who carry out the work on Ofgem’s behalf. The auditors are required to physically inspect the relevant heating system and the participant’s property. They will also ask to see certain documents and records. Once inspected, the auditors are expected to report their findings to Ofgem who will then decide whether the participant continues to be compliant with the rules.

29. The scheme is covered by a set of regulations known as The Renewable Heat Incentive Scheme Regulations 2018 (as amended). Under these regulations, participants are required (among other things) to provide Ofgem with meter readings related to the relevant heating system. The Regulations also give Ofgem the authority to recover money from the participant in instances where that participant has been overpaid.

Our view

30. We do not dispute Ofgem’s conclusion that Mrs X has been overpaid. All parties agree that the meter readings submitted were incorrect (albeit likely through accident rather than by design). Given that the payments to Mrs X were made based on those incorrect readings, we cannot say Ofgem was wrong to amend its calculations accordingly.

31. We also cannot question Ofgem’s decision to seek recovery of the overpayment, as Ofgem has a duty to protect public funds. Regardless of how the overpayment occurred, we cannot escape the fact that Mrs X has received money to which she was not entitled. In seeking to recover those funds, Ofgem is acting in line with its statutory duties (something we would expect organisations to do under our Principles of Good Administration – Getting it right).

32. In such circumstances, we would also expect organisations to be customer focused and act fairly and proportionately. We are satisfied Ofgem has done this. It has made clear that it does not expect Mrs X to repay the money in one lump sum and is willing to work with her to agree an acceptable repayment plan. This willingness to respond flexibly to the circumstances of the case is in line with our Principles of Good Administration.

33. That is not to say nothing went wrong. At the heart of Mrs X’s complaint, is her contention that Ofgem did not identify the meter issue during the 2020 site audit. The evidence shows that, following the site audit, Ofgem had no concerns regarding the meters or any metering issues. It also reassured Mrs X there was no need to rectify any payments she had previously received. It is therefore understandable that Mrs X continued to believe everything was in order. It is also understandable Mrs X was so shocked to learn she had been overpaid such a substantial amount when no concerns had previously been raised about her entitlement.

34. Having considered all the evidence, we remain of the view that Ofgem’s failure to identify the meter issue during the 2020 site audit, and to notify Mrs X of the resulting overpayment at that time, amounts to maladministration. Whilst we acknowledge Ofgem’s position that this was an isolated human error, this does not alter our conclusion.

35. The significance lies not only in the error itself, but in its consequences. Had the error been identified during the 2020 audit, the total overpayment would likely have been significantly lower. Instead, incorrect payments continued for approximately a further three years, increasing both the amount of public funds paid in error, and the amount subsequently requiring recovery from Mrs X.

36. Even if Ofgem had identified the error during the 2020 audit, Mrs X would still have been informed that she had been received an overpayment and would still have been required to repay money to which she was not entitled.

37. We recognise, however, that by the time Ofgem notified Mrs X of the overpayment, her circumstances were different to when she should have received this news. It is therefore understandable that she experienced distress on learning she owed such a substantial sum. However, we cannot conclude that this distress was caused entirely by Ofgem’s delay. Whilst the delay contributed to the overpayment being higher than it would otherwise have been, the distress also arose from the unavoidable consequence of having received payments to which she was not entitled and which were always liable to be recovered.

38. We also recognise that the delay meant the overpayment was likely higher than it would have been had the error been identified in 2020. However, the additional payments were also public funds to which Mrs X was not entitled. Ofgem has offered to agree a repayment plan with Mrs X, which takes account of her circumstances, when recovering the funds. In these circumstances, we do not consider there is a sufficient basis to recommend that Ofgem write off any part of the overpayment or make a financial payment that would, in effect, offset money that remains recoverable under the scheme.

39. Taking all of the circumstances into account, we are now satisfied that Ofgem’s acknowledgement of, and apology for, its error is enough to put matters right for the injustice caused by the maladministration.

40. In summary, we have found maladministration because Ofgem should have identified the meter-reading issue earlier and notified Mrs X of the resulting overpayment at an earlier stage. However, we do not consider that this maladministration requires any further remedy. Ofgem has acknowledged and apologised for its error and has offered flexibility around repayment, in a fair and proportionate manner. Taking everything into account, we are satisfied that Ofgem has done enough to put matters right.

41. We realise this is unlikely to be the outcome Mrs X was hoping for from her approach to us. We hope we have clearly explained the reasons for our decision. We would like to thank Mrs X for bringing her concerns to our attention and to thank her for her patience while we investigated this matter.

1. The views set out in this report represent our final decision, which is not open to further amendment.

2. Having carefully considered Mrs X’s concerns, we have reached the decision to not uphold this complaint.

3. Although we have found Ofgem’s failure to identify a meter-reading issue during the 2020 site audit is evidence of maladministration, we are satisfied it has already provided an appropriate remedy for the injustice caused by that error.

4. We are satisfied Ofgem acted reasonably in seeking to recover the overpayment, because Mrs X had received public funds to which she was not entitled. The error we have identified relates to the delay in identifying and communicating the overpayment, not to Ofgem’s decision to recover it.

5. We have therefore considered whether this caused an injustice which still requires a further remedy. Our view is that it does not. Ofgem has acknowledged the mistake, apologised for it, and offered to agree a repayment plan with Mrs X. In the circumstances of this case, we consider that is enough to put matters right.

6. We were sorry to learn of the events which led to Mrs X’s complaint to us. This has clearly been a deeply distressing experience for her. We hope this report explains the distinction between our finding of maladministration and our view that no further remedy is needed.