We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
NPower gas 'sculpting'
Options
Comments
-
DirectDebacle wrote: »Yes it was a pleasant surprise when I read that and equally surprised that it hadn't been widely known. Well not to me at any rate.
Ofgem have given themselves until 9th April to provide the remainder of the info I requested. They have already warned me that they will not supply all I requested. What they do not supply will perhaps say as much as what they do. I have received no correspondence between npower and Ofgem so far. Perhaps I won't. We shall see.
To coin an over used phrase, I regard this as the end of the beginning, not the beginning of the end. With luck the combination of Consumer Focus, the press and customer pressure will lead to a satisfactory conclusion.
Any idea what the FOI Act says about restriction of info supply? Surely it could only be witheld if it's in the interests of national security to do so? Can't imagine correspondence betwixt OFGEM and npower being politically sensitive. Unless my previous wild speculation about Govt involvement had some truth attached to it?Call me Carmine....
HAVE YOU SEEN QUENTIN'S CASHBACK CARD??0 -
They have identified that these exemptions may apply, 30,31,36,40,43, which are detailed here:
http://www.ico.gov.uk/home/what_we_cover/freedom_of_information/guidance.aspx#exeguidance0 -
lo guys, i'm back
been moving house, then had to wait to get the broadband installed etc..
glad to see ofgem finally made a decision, although does not cover the full extent of the issues, but still it is finally acknowledged.
Glad to see you are all keeping up the fight
How did your claim turn out?0 -
Hi
Just to give you an update on my claim. I sent a recorded letter on 25.3.9 and recieved a reply back from npower (gateshead address) yesterday (2.4.9) with a letter date of 31.3.9. Thus, a rapid inital response.
Essentially they write '...your complaint has been entered into our case management system ...one our Customer Relations Executives will be in touch with you to address the points raised in your correspondence.'
Electronicaly signed by Elizabeth Gibson - Head of Customer Relations.
Watch this space.0 -
DirectDebacle wrote: »How did your claim turn out?
I never took my case to small claims, although I had completed the form, and was just about to send it off. Npower executive office (after 5 months of complaint) decided to pay me off as a gesture of good will. This was around the time that the first couple of cases were going to small claims.
They paid back (gesture of good will) £170 to myself, and £100 to my father in law.0 -
Has anyone established whether the ombudsman are willing to investigate your claim straight after the first 'Dear John' letter from npower? I believe that would cost npower £300+ for every case, wouldn't it?Call me Carmine....
HAVE YOU SEEN QUENTIN'S CASHBACK CARD??0 -
1carminestocky wrote: »Has anyone established whether the ombudsman are willing to investigate your claim straight after the first 'Dear John' letter from npower? I believe that would cost npower £300+ for every case, wouldn't it?
Correspondence between npower and Ofgem indicate that there were (number deleted) outstanding cases with the Ombudsman as at 22nd, August last year.0 -
Just what exactly is Ofgem playing at? Even on its own website, Ofgem specifically says,DirectDebacle wrote: »They have identified that these exemptions may apply, 30,31,36,40,43, which are detailed here:
http://www.ico.gov.uk/home/what_we_c...px#exeguidance
________“Ofgem endeavours to keep its operations transparent”.
Where’s the transparency now? Why should it feel the need to withhold anything from the public in this matter? Well… here is my theory for a likely scenario.
When Ofgem received the Energywatch complaint last year, it realised that it had already slipped up quite badly. After all, as the energy suppliers’ regulator, it had completely failed to spot (or deal with) what npower was up to (despite individual complaints drawing the matter to its attention). Yet protecting consumers is precisely what Ofgem is for. Indeed its own website clearly states
_________“Protecting consumers is our first priority”.
I draw your attention in particular to the expression “first priority” in the above sentence. Therefore the formal Energywatch complaint came as something of an embarrassment to those in Ofgem whose job it is to monitor the tariffs etc and protect the public.
So Ofgem went into damage limitation mode firstly by taking ten months or so to complete its “investigation” into the Energywatch complaint (as Cardew long ago predicted it would), in the hope it would all fade away in the public mind; and secondly it condensed the whole issue as small as possible so as to minimise any lingering embarrassment. And thus we see a token amount of compensation being paid by npower to a token 200,000 of the 2.2 million affected customers, while the issue is spun to the press as hinging upon a technical lack of notice by npower to its customers rather than overcharging.
But to Ofgem’s horror it has all backfired. Consumer Focus is asking questions; the Times continues its interest in the story; and now…now DD has made a searching Freedom of Information Act request. And all the while this forum thread just keeps on going and building up the pressure.
Oh - if only Ofgem had done its job properly in the first place and resolved npower’s overcharging of its customers well before Energywatch found it necessary to make a formal complaint about it. How much better for Ofgem’s credibility that would have been.
Or once Energywatch had made its complaint, if only Ofgem had handled it properly, instead of worrying about having egg on its face; how much better a position it would be in than it is in now.
Now, Ofgem has its back to the wall. Now, it is stalling and delaying wherever it can; still hoping against hope that the press and public won’t be able to prove what a complete hash it has made of things.
As for Ofgem’s attempts to claim exemptions from the FOIA disclosure, having followed DD’s link and glanced at each section concerned, I personally feel that there is a considerable element of bluff by Ofgem. I find it hard to see how some of the exemptions it quotes can even apply (let alone stand up to scrutiny), and that when it is put to the test (for example) to show that disclosure of certain information is not in the public interest, Ofgem will be found seriously wanting; and will ultimately suffer the indignity of being ordered to disclose most if not all the information it tries to keep back.
Clearly the current mindset of the people at Ofgem would seem to be that any fresh (and properly conducted) investigation it makes would show the first to have been a seriously embarrassing waste of time; and that it must therefore avoid a fresh investigation at all costs. Or if one is held, it must reach the same conclusion as the first. Either of these paths will, I suspect, lead to a day out for the chief executive of Ofgem in front of a Parliamentary select committee, and being held out to serious public scrutiny from all branches of the media.
But there is a way out for Ofgem. If for example during its second investigation it found that npower had either deliberately or inadvertently given misleading or incomplete information in response to Ofgem’s enquiries, then the first investigation can be set aside with no loss of face at all. Surely that is the obvious way forward.
Right now Ofgem is in the mire, and sinking further with each passing day, thanks to its current mindset. Delaying tactics (and spin) will simply not work. Ofgem has to announce a fresh and speedy enquiry without delay; otherwise it will sink further still…to the point of no return. And who knows…people’s jobs at Ofgem could be on the line. I have no doubt that DirectDebacle will become Ofgem’s nemesis (as much as npower’s) unless it changes its mindset pretty quickly.
Will Ofgem see sense? Somehow I doubt it. I tend to agree with DD’s Churchillian phrase, “This is just the end of the beginning”.0 -
Further to my previous post today, here is an email I received from Consumer Focus this afternoon in reply to my enquiry if they yet had heard from Ofgem. The Ofgem document referred to appears after the email.
Hi
We in fact got it just yesterday – I’ll forward you a copy. We’ve had a look at it and it has raised some further questions we want to put to Ofgem, which I’m sending off today. Unfortunately it hasn’t really made things a lot clearer for us and we’re now considering next steps – perhaps obtaining some independent legal advice on the matter depending on Ofgem’s response. I’ll certainly keep you updated on what our further investigations uncover.
Regards
NPOWER TWO TIER TARIFFS – DECISION BY OFGEM TO CLOSE CASE
Ofgem announced on 13 February 2009 that it was closing its investigation in relation to Condition 44 of Npower’s gas supply licence in the light of payments to be made by Npower to consumers who had been adversely affected by changes. This note describes the nature of the investigation and the basis for Ofgem’s decision to close the case.
Background
On 7 March 2008, Energywatch referred a complaint to Ofgem, making reference to compliance with Condition 23 of the gas supplier licence. There was a range of subsequent media coverage of the issues, which centred on changes made to tariffs during 2007. Some individual cases were referred to the Energy Ombudsman and there was also a civil case brought by one Npower customer. We also received some direct correspondence from individual consumers.
At the time Npower had 2.2m domestic gas customers on two tier tariffs – for example, “Gas Guardian”. Under such two tier tariffs, the first 4572 kWh of usage per year were charged at a higher “Primary Block” rate, with this overall annual total apportioned on a seasonal / monthly basis.
With effect from 1 May 2007, Npower made a number of changes to its pricing structure. The first change was a revision of the seasonal pricing profile to facilitate system changes. The annual threshold was apportioned going forwards on a flat rate basis and at the same time Npower started a new “tariff year”. In the short term this change had the effect of increasing bills for some customers (who were now paying the higher “Primary Block” tariff rate on more units than they would have done had the changes not occurred). The second change was a reduction in the price of the follow on units. At the same time, Npower also increased their monthly direct debit dual fuel discount. Npower advised Ofgem that it considered these changes together and looked forward at the effect on customers over the subsequent 12 month period, on the basis that annual consumption and savings comparisons were a natural approach to such analysis and commonplace in the energy industry. Moreover, Npower considered that applying other bases for analysis of affected customers would not adequately identify affected customers. As a result, Npower had concluded that no customers would be worse off and that no notification requirement under Condition 44 was triggered.
For any cases where customers faced a net increase, there was an obligation to notify them of the effect of the change and their right to seek a transfer to a different tariff or supplier under Standard Licence Condition 44(6), which was in force at 1 May 2007 (similar obligations were contained in the new Condition 23 introduced on 1 August 2007). Failure to notify could constitute a licence breach if the change, “varies any term to the significant disadvantage of the domestic customer or raises the charges”. Ofgem therefore decided to open an investigation into Npower’s compliance with this licence obligation.
The seasonal profile was re-introduced with effect from 1 November 2007 and again Npower started a new tariff year. It appears that customers were correctly notified of this change.
The relevant licence condition (SLC44(6))
“Except in such cases or classes of cases as may be approved by the Authority, where a domestic supply contract allows for unilateral variation (in any respect) by the licensee and pursuant thereto the licensee varies any term to the significant disadvantage of the domestic customer or raises the charges, the licensee shall within 10 days of the variation give the customer written notice:
(a) of the variation;
(b) of the domestic customer’s right to terminate the contract; and
(c) of the effect of paragraph 7.
7. Where the domestic customer gives to the licensee a valid notice of termination within 14 days of receiving the notice under paragraph 6, the licensee shall treat the variation as ineffective and shall neither enforce nor take advantage of it.”
Information requests
Ofgem issued several information requests of Npower. These were in April, June and September 2008. The areas covered are included in the annex to this document.
Npower first responded on 14 May 2008. It stated that in its view the detrimental effect of changes on 1 May 2007 at lower consumption levels was to be offset by a reduction in prices at the higher level, together with the introduction for relevant customers of an increase in Npower’s annual dual fuel discount for monthly direct debit paying customers, and no customers were disadvantaged over the next year. It considered that this would therefore obviate the need to issue SLC44(6) notifications. It also stated that it had applied the concept of a “tariff year” (i.e. that the accumulation of consumption towards the 4572 threshold stops/restarts whenever a tariff change occurs).
On 2 July 2008, Npower provided further information and confirmed that there was no definition of “tariff year” given to customers.
On 17 September 2008, Npower responded with further information about single and dual fuel customers comparing a “no change” position to the May 2007 changes and provided details of seasonal consumption. It also stated that a new tariff year began on the change in charging structure. It provided a table showing the breakdown of the effect on customers for the “tariff year” 1 May 2007 to 30 April 2008.
Ofgem’s consideration of the case
The investigation focused on whether Npower should have notified customers of changes to its two tier tariffs.
In Ofgem’s view, in considering whether the change led to an increase in charges it is appropriate to look at the overall impact of the changes that were made at that time.
While Npower’s position was that no customers were disadvantaged, Ofgem’s analysis showed that some customers would have been disadvantaged by the tariff changes. Ofgem considered that Npower should have looked at these cases. In Ofgem’s view, it was apparent that customers with consumptions marginally above the new “Primary Block” thresholds might not benefit fully from the offsetting effect of the price reductions at the upper consumption level. Npower has acknowledged this analysis in correspondence. However, Npower maintained and continues to maintain that it had complied with Condition 44.
The extent of the impact appeared to depend on the consumption levels of individual consumers and the time period over which the assessment was made. For most customers, the net effect would have been a reduction in charges. However, Ofgem’s investigation team reached a provisional view that as some customers would have been adversely affected by the changes in two tier tariffs on 1 May 2007, Npower should have notified them, so that the customer had the opportunity to terminate the contract.
Enforcement options
Compliance with licence obligations
Ofgem’s investigation considered whether there had been a past breach of Condition 44 of the gas supply licence. In such circumstances, Ofgem has the power to impose a financial penalty, but not to award compensation to those affected. Its ability to impose a financial penalty is subject to statutory time limits. Given that the issue of failure to provide proper notification inevitably occurred a significant time before Ofgem received the referral from Energywatch, the Ofgem investigation team considered that the Authority would be unable to impose a penalty in this case if it concluded there had been a licence breach.
Consumer protection legislation
Ofgem also considered whether its powers under the Enterprise Act 2002 to enforce consumer protection legislation could be used in this case. These powers require Ofgem to give a company the opportunity to address a failure to comply with the legislation. If the company does not do so, Ofgem may apply to the court for an order requiring action by the company. If the company subsequently fails to comply with an order, the court can take action, including levying a fine.
Ofgem examined in particular whether there was adequate notification of the meaning of the phrase “tariff year”. Ofgem was concerned that consumers would not have been aware in May 2007 that a new tariff year could be started.
Npower said that it did not give customers any definition of the phrase “tariff year”. In the context of customer literature, Npower commented, “Since we believe that it is understood that a tariff year in these communications refers to the year ahead of the communication, and that the amount of detail that this information can carry is limited, then further definition is not made.”
Npower subsequently wrote to Ofgem, stating that it had revised the nature of such information provided to its customers, including in particular changes in its tariff leaflets and in the website version of its terms and conditions to say, “The primary rate applies to a maximum of 4572 kWh (units) of gas and 728 kWh (units) of electricity that you may use throughout any continuous period of 12 months“. More generally, Npower has taken several steps to improve information provided such as publishing a leaflet called “How to work out your gas bill” and improvements to its tariff leaflets, customer welcome letter, internet site, terms and conditions, Frequently Asked Questions, price change letters and information on the back of bills. Ofgem also took into account the fact that Npower had notified customers of changes which took place in November 2007.
Moreover, it has subsequently ceased to apply the principle of restarting a tariff year.
This action meant that there would be no grounds for enforcing consumer protection legislation on the basis set out above as the company had taken action to explain terms going forwards and there was no ongoing issue.
For the avoidance of doubt, at no time has Ofgem formed a view on whether there may have been a breach of contract between Npower and individual customers. Ofgem’s position on this matter does not preclude individual customers pursuing cases with Npower or subsequently with the energy ombudsman or a court if appropriate.
Discussions with Npower
Ofgem’s powers do not extend to requiring compensation for customers. A number of discussions were held with Npower about action it might take. In the light of Ofgem’s arguments relating to the impact on customers with low consumption, Npower subsequently proposed to make this good.
Following discussions, Npower improved its offer with the effect that total payments were estimated at around £1.2m to the customers identified who had been adversely affected by the overall effect of the May 2007 changes in tariff. It agreed to do this without customers having to apply and it would make payments to both existing customers and to those who had switched supplier in the meantime.
Decision
Ofgem considered Npower’s suggestion to make payments to individual consumers totalling around £1.2m and decided to close the investigation on administrative priority grounds.
Ofgem’s decision was based on the following factors –
• The fact that the issue related to notification to customers in May 2007 and the past nature of the issue.
• Ofgem’s investigation team’s view that the Authority would be unable to impose a financial penalty in this case.
• Npower’s position on compliance and the consequent need to follow the full administrative procedure for consideration of a breach without the option of imposing a penalty.
• The inability to take enforcement action under consumer protection legislation, and Npower’s subsequent action.
• Ofgem’s understanding that £1.2m would be paid to those affected.
Furthermore, Ofgem noted that the wider question of suppliers providing clear and accurate information to consumers in future was an issue highlighted in its energy retail probe. Ofgem is considering what action should be taken to address this.
Ofgem also noted that any individual consumers who were unhappy with the way Npower dealt with their individual cases would be invited by Npower to contact them.
Office of Gas and Electricity Markets
April 2009
Annex
Information requests to Npower by Ofgem
April
• Copies of relevant contract terms
• Details of tariffs affected and action taken to notify customers of changes
• Relevant customer numbers
• Details of any compensation awarded to customers (e.g. the “Gas Guardian” group) whose contracts provided for a fixed price for a specified period.
June
• A detailed schedule of relevant tariffs / customer numbers / prices.
• Copies of tariff statements or other contractual terms defining “tariff year”.
• A detailed statement of estimated financial impact on a range of customers.
• A report on civil proceedings for recovery of perceived overcharge.
September
• A comparison of monthly bill calculations for different consumption bands
• A table showing assumptions on seasonal consumption patterns of gas used in calculations, giving an average percentage of the annual gas used in each month of the year.
• Information showing how many of npower’s customers in each of the consumption bands were eligible for the Monthly Direct Debit Dual Fuel Discount for the period between 1 May 2007 and 31 October 2007 and how many customers’ tariff years started in each month between October 2006 and April 2007.
• A table showing how many customers were adversely affected by the 1 May 2007 price changes from that date up to 31 October 2007, (and not taking into account any charges that occurred or would have occurred after 31 October 2007).
I for one sincerely hope Consumer Focus takes legal advice on what I consider to be a most shameful document from Ofgem. It has so many shortcomings in it that I am truly staggered.0 -
Ofgem’s investigation considered whether there had been a past breach of Condition 44 of the gas supply licence. In such circumstances, Ofgem has the power to impose a financial penalty, but not to award compensation to those affected. Its ability to impose a financial penalty is subject to statutory time limits. Given that the issue of failure to provide proper notification inevitably occurred a significant time before Ofgem received the referral from Energywatch, the Ofgem investigation team considered that the Authority would be unable to impose a penalty in this case if it concluded there had been a licence breach.
Isn't this a bit like a judge stating he can't impose a custodial sentence on a convicted murderer because the offence was committed too long ago? Anybody any idea what the statutory time limits actually are? I do tend to back up what Sterling suggested earlier. I think this has the potential to blow up in Ofgem's faces. I personally hope so. Call me Carmine....
HAVE YOU SEEN QUENTIN'S CASHBACK CARD??0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 350.9K Banking & Borrowing
- 253.1K Reduce Debt & Boost Income
- 453.5K Spending & Discounts
- 243.9K Work, Benefits & Business
- 598.8K Mortgages, Homes & Bills
- 176.9K Life & Family
- 257.2K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.6K Read-Only Boards