Energy supplier Ovo has handed £1.2 million to Ofgem to avoid potentially costly enforcement action from the regulator over a failure to roll out enough smart meters to its customers.

Ovo’s subsidiary, SSE Energy Services, failed to meet its smart meter quota for the second year in a row in 2019, Ofgem revealed on Friday.

It said that Ovo, which inherited the problem when it acquired the business from SSE in January this year, had agreed to pay £1.2 million into Ofgem’s consumer redress fund.

Last year, SSE paid £700,000 into the same pot for a similar failure.

Ovo, which made a “voluntary payment” to avoid formal enforcement action from Ofgem, said it has been working to improve its smart meter rollout.

In a statement, Ofgem said: “Under the Government’s smart metering implementation programme, suppliers are required by their licence to take all reasonable steps to roll out smart meters to all homes and small businesses by mid-2021.

“To work towards this, suppliers set individual annual targets for smart meter installations and Ofgem monitors performance against these targets.

“SSE Energy Services failed to meet its smart meter installation target for 2019, before it was acquired by Ovo Energy in 2020.

“Due to the voluntary payment of £1.2 million to Ofgem’s consumer redress fund, Ofgem has decided not to take formal enforcement action.”

Tony Keeling, managing director of SSE Energy Services, said: “Today’s news relates to the reporting year of 2019, pre-dating Ovo Energy’s ownership of SSE Energy Services, which it acquired in 2020.

“Since Ovo’s acquisition of SSE Energy Services, we have significantly improved our smart meter rollout programme, to ensure that we can install smart meters in more homes across the UK – a crucial part of our Plan Zero strategy and the transition to net-zero.

“Ovo Energy has consistently met and exceeded all of its smart meter targets, with over half of its customers currently benefiting from the technology.”