It’s never a good sign when a Government minister tells a business to ‘get a grip’ but that’s exactly what happened to Thames Water this week.

Chancellor Jeremy Hunt was expressing his frustration after the water company failed to automatically compensate his constituents for leaving them without water last year. To which the resounding response has been ‘auto-what?’

While many of us are aware that we are entitled to compensation from businesses when they fail to provide some services, it’s not always clear if this is automatic or if we have to apply for it, or how much we are entitled to and how it works.

So I’ve plunged in to the regulations, grilled the powers-that-be and investigated the quirks to bring you your guide to compensation when things go wrong with utilities businesses – so you know precisely what you’re entitled to.

Types of compensation for service failures

Nothing is ever simple, so it goes without saying that compensation for service failures does not follow a set pattern. There are rules, caveats and complications, which is why so many businesses get away with not following the compensation requirements as well as they should be doing.

Compensation can be automatic (usually applied to your bill in the form of a credit or a deduction from what you owe) or by application (you have to do the work). Confusingly, different types of service failure can lead either automatic or application compensation.

It’s also worthwhile highlighting the distinction between ‘compensation’ – a payment for failing to provide a good service, and ‘refunds’ – getting back money you’ve already paid. So the incredibly frustrating ‘delay/repay’ system for train refunds falls in to the latter category, as all you’re getting back is the money you’ve forked out. I’ll be tackling that ludicrous system in a future column, fear not!

Water compensation (automatic)

You are entitled to compensation automatically if your water supply is interrupted… depending on which part of the UK you live in. Under the Guaranteed Standards Scheme (GSS), water companies must ensure that water pressure is (more or less) consistent, appointments to fix issues are kept and supply interruptions must be dealt with promptly. These rules apply to England and Wales.

In Scotland, Scottish Water has a consumer charter that lists the compensation payable under a range of different circumstances. In Northern Ireland, there is no automatic compensation as domestic customers do not pay water rates.

Some compensation is paid to you automatically, meaning you’ll either receive a payment directly, or as a credit on your water bill. Don’t assume though – lots of people tell me they haven’t been auto-compensated. For some situations, you may have to make a claim to your water supplier.

You can check out a table covering all of the payments that you’re entitled to on Ofwat’s website. But here’s a brief summary:

  • Appointments not made properly or not kept: £20
  • Low water pressure: £25
  • Not telling you about planned works that will cut off your water: £20
  • Not restoring the water supply (first 24 hours): £20
  • Not restoring the power (each subsequent 24 hours): £10
  • Failure to sort out written queries and changes to how you pay: £20
  • Written complaints not addressed on time (replies within 10 working days, payment changes within 5 working days): £20

Excitingly, there are also late payment charges if the compensation isn’t paid on time too. These timescales vary depending on the situation, but are between 10 to 20 days (no late payment for water pressure issues).

If there’s a problem with sewers that affects your property or business, the compensation increases. This involves a payment equal to your annual sewerage charges – ranging from £150 to £1000 if your property is flooded internally (ew). If flooded externally it’s 50% of the annual sewerage charges from £75 to £500. Your sewage charges are listed on your water bill.

You should get the money by cheque, unless you owe the company money, in which case it will be deducted from your debt.

You’re also entitled to compensation for interrupted services during droughts – though for essentials, obviously, not filling up the hot tub. The payment is currently £10 a day (more for business customers).

If the business doesn’t cough up you can make a formal complaint. Failing that, go to the free Consumer Council for Water (CCW), who will look at your complaint in England and Wales. If the water company or the CCW can’t sort out the complaint, it can be referred to Ofwat.

Energy switching/missed appointments (automatic)

Sadly, you don’t get automatic compensation for billing errors or faulty meters. You can, of course, ask for it – and you should too. After all, problems with energy businesses are dominating my postbag at the moment, so when making a complaint, tell the business what you want to sort it out – including compensation.

You can get compensation for missed appointments however. Ofgem tells me:

  • Suppliers must offer an appointment within a “reasonable time”
  • Faulty meter appointments should take place within 5 working days of notification.
  • Faulty prepayment meters where the customer has lost supply should take place with 3 hours on a working day or within 4 hours on any other day.
  • Customers who wait longer should receive £30 payment under The Electricity and Gas (Standards of Performance) (Suppliers) Regulations 2015.
  • If a supplier fails to make these initial payments, customers should receive an additional £30 payment under regulation 8.3 of The Electricity and Gas (Standards of Performance) (Suppliers) Regulations 2015

Other than that, auto-compensation only applies when you are switched to another energy supplier without permission or delays occur. This happens more than you’d think, which is why regulator Ofgem introduced this payment in May 2020. Of course, since then the energy crisis has all but killed off switching. But lots of people are still telling me they’ve been transferred to another energy provider with not explanation or logical reason.

Here’s when automatic compensation rates should be paid:

  • Failure to complete a switch within 15 working days. £30
  • Failure to refund a credit balance with 10 working days of the final bill: £30
  • Switching you to another supplier by ‘mistake’. £30 from the new supplier.
  • Failing to acknowledge or rectify a mistaken switch within 20/21 days: £30 from the new supplier.
  • Failure to issue a final bill (from the old provider) within six weeks: £30

How you get the cash depends on the energy supplier. So this could be direct to your account, by cheque or as a credit to your bill or meter.

Energy power/supply problems (by application)

Who to contact in a power cut:

  • Call 105  You will be connected to your local electricity network operator’s emergency line.
  • Call the free National Gas Emergency Service immediately on 0800 111 999.

Let’s face it: it’s sorting out power outages that matter at this time of year. But once the lights and heating are back on, you are entitled to compensation, but with two catches. You have to apply for it, and it comes from your network provider, not your energy supplier. This is a crucial difference because a: it’s more complicated, and b: there are time limits.

First things first though. You’ve got to find your network supplier. You can click the links here to track down the gas and electricity supplier by tapping in your postcode. You’ll need to put your claim in within three months of the incident, or within a month if the power cut was planned but you weren’t given notice. That doesn’t make much sense to me either but I don’t make the rules…

When I tested this process, I found that for gas outages you’ll need to select the ‘gas supplier’ to make a claim. To save lots of time and clicks type the name of the network supplier and ‘power cut claim’ in to a search drive to get to the appropriate claims section of the website.

Okay, let’s get to the compensation! What you get depends on whether the power cut occurred as a result of:

  • Severe weather.
  • Normal weather.

For severe weather, Ofgem states:

Storm category 1

  • You can get £80 if your power has been cut-off for 24 hours.
  • You will get an extra £40 for every 6 hours afterwards. The maximum amount you can claim is £2,000.

Storm category 2

  • You can get £80 if your power has been cut-off for 48 hours.
  • You will get an extra £40 for every 6 hours afterwards. The maximum amount you can claim is £2,000.

If the power cut is because of disruption to the national energy supply, you will not be entitled to compensation. This is because it is not due to a fault on the network.

If the power outage occurs during normal weather, the supplier has 24 hours to get the power back on, if more than 5,000 homes are affected by the (single) fault. You get £90 after 12 hours and a further £40 for each additional 12 hours, capped at £300.

If you want to take things further, then I do have some great news. Usually you can only go to an Ombudsman or ADR scheme about a business you have a direct relationship with (a contract basically). But you CAN complain to the free Energy Ombudsman about both your gas and electricity supplier and the network provider when it comes to power outages and compensation.

Broadband and landline compensation (automatic)

Let’s start with the good news. Telecommunications regulator, Ofcom, has an automatic compensation scheme that means you should get (small) pay outs if things go wrong with your broadband service.

I’m often asked if this is ‘the law’ by disgruntled customers. It isn’t but don’t get so bogged down with the technicalities. The scheme is actually opt in – but it’s considered to be good business practice – with all the main providers participating. You can find a full list here.

Here’s what you can expect in terms of automatic compensation:

  • Delayed repairs after you’ve lost service: £9.33 per day after two working days.
  • Missed appointments: if the engineer doesn’t turn up or the appointment is cancelled with less than 24 hours’ notice: £29.15 per appointment.
  • Delays with starting the new service: £5.83 for each day after the missed start date.

These payments should increase annually in line with inflation, which is handy as your bill will go up at the same time – April 01st – in most cases (though mid-contract price increases should be changing in time for 2025.

Compensation should be paid no later than 30 days after the incident and will be paid as a credit, though you can ask for an alternative method.

This may seem fantastic, but I constantly hear from people who tell me that they didn’t get the compensation they were entitled to. This is totally unacceptable – but you can still make a complaint to the business. Make sure you note down when the problem occurred. This could be through screenshots of service trackers like Down Detector, though calling and reporting the problem is best.

If the complaint doesn’t work, then why not make a complaint to the Ombudsman? There are two Ombudsman Services for the telecoms industry. As an aside, why is this? Surely, we just need one Ombudsman Service so businesses can’t just pick the one they prefer. I’m on this, bear with me…!

Ombudsman services are free and are accessible fair and impartial alternatives to the court, with the Ombudsman’s decision ultimately being binding on the firm (but not you).

The largest of the services is the Communications Ombudsman and you can contact them here. Alternatively you can find CISAS here.

Featured in Times Money Mentor – Martyn James

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