Capita PLC's (LSE:CPI) smart meter business has agreed to pay £200,000 into an Ofgem redress fund after the energy regulator concluded an investigation into its procurement practices, in the latest setback for the outsourcer.
The announcement comes a day after Capita's shares fell over 12% following sharp criticism from the government over its handling of the Civil Service Pension Scheme, with ministers withholding payments and considering longer-term changes to the contract.
On Wednesday, Ofgem said it had reviewed the procurement of five contracts awarded between 2021 and 2024 to the group's Smart DCC subsidiary, which operates the UK's smart meter communications network.
It found one contract had been awarded through a non-competitive process and another had been awarded to parent company Capita.
The regulator said it had identified no consumer detriment but concluded Smart DCC should strengthen its procurement processes to ensure future fundamental service capability contracts are not awarded to related companies.
As part of the settlement, Smart DCC will pay £200,000 into Ofgem's redress fund and has agreed to improve its procurement procedures.
Capita said the contract awarded to the group formed part of the national communications network supporting smart meter monitoring. It added that, as previously announced, the contract will transfer to a not-for-profit service provider during the coming year.
Smart DCC is a wholly owned subsidiary of Capita but is not consolidated into the group's financial statements.
Shares in Capita fell 1.25% to 277.5p in early trading on Wednesday.
