NPower gas 'sculpting'

Sterling wrote: »

1. Npower has a team of accountants and dedicated mathematical experts (with powerful computers) whose job it is to perform the most detailed analysis of any kind of proposed change in prices or price structure, and to forecast the financial implications to the board of directors; or


Take your pick. Personally, I rather lean to option 1. I suspect the directors saw the large numbers that were forecast in extra profits, and took the gamble that no-one would notice. And bearing in mind that even Ofgem seems to be out of its depth, thus far, the directors’ gamble seems to be paying off. All they have to do is keep it bland with Ofgem, pay out £1.2million in Mickey Mouse refunds, and “goodwill payments” to anyone smart enough to make a claim. After all, “There won’t be many of those, will there, lads?” I wonder.

If you are correct, then I suggest it would be grounds for criminal investigation.

Even in these days when companies seem to get away with 'creative accounting' you cannot devise a highly elaborate scheme to overcharge customers and then fail to mention this change - even buried in the small print.

Presumably the decision to impliment the suspension of sculpting would have been made at a minuted meeting at NPower; and an OFT investigation would demand to see those minutes.

We won't go away.

http://www.timesonline.co.uk/tol/money/consumer_affairs/article5902979.ece

I thought the most extraordinary point made in the article was:

However, Ofgem did argue that its powers are limited and that it can look only at certain complaints, such as failure to notify customers of tariff changes, rather than broader issues of overcharging.

If their investigative powers are really so limited,I simply cannot believe that in cases where there is clear suspicion(I will put it no higher than that!!) of overcharging that ofgem cannot refer the issue to The Office of Fair Trading(OFT)

Another good piece from The Times and they are keeping the issue alive, which is most encouraging.

I am given to understand that Ofgem are aware of the wider issue but do not feel they have the power to investigate. I think in many respects there is no difference to their recent investigation and investigating almost identical causes and effects of lack of notification to changes on 1/10/04 and 1/11/07. Maybe it is of such a scale that worries them. One concern would be that it would expose how ineffective they have been in the past.

If more serious issues came to light that they are not authorised to investigate then surely it would be their duty to inform the appropriate authority of their concerns.

Two weeks ago I made a FOI Act request for details of their investigation. I have been informed it has been passed to their investigation branch. Since then the silence has been deafening.

The Ombudsman was originally set up and financed by the member energy companies. They are there to iron out issues that cannot be satisfactorily agreed between the complainant and the company. They may be of assistance with this npower problem but will not be able to mount the wide ranging investigation that is required. I would not discourage making claims through the Ombudsman. They may be met and as The times pointed out, each one investigated will cost npower.

I have waited (like so many of us) patiently for the Ofgem ruling and also the outcome of their meeting with the M.P. I think I can see which way the wind is blowing.

I have regularly made my views, as to who should be investigating matters of this nature, known on many occasions. I have now submitted my complaint to the appropriate authority. It will be interesting to see if they consider it a matter for them or refer it back to Ofgem.

There is still a chance that Consumer Focus may come in at the 11th hour and join us in our battle. After all, protecting the consumer is what they were set up for.

1carminestocky wrote: »

It's entirely clear that there are many many millions at stake here (too dramatic to claim it could even affect npower's British operation? ) and I am also of the opinion that Ofgem are aware of the ramifications of further, in-depth investigation with a proper remit to get to the bottom of it all (and desperately don't want to do it

Thank you for your comments, interest and support 1carmine.

I am absolutely sure Ofgem do not want to open this particular can of worms. If I accept that they are not geared up to investigate criminal offences (I sincerely hope they aren't) then what are they set up to investigate. Quite a lot, is the answer.

They are there to enforce the Gas Act, 1986, amongst other things. The Act, under the Standard conditions of Gas Supply licence, condition 23.3 Notification of unilateral variation, defines the reponsibilities of the supplier and customer if the supplier (licensee) unilateraly varies the terms of the contract.

This was the breach of licence conditions (and npowers Terms and Conditions) that Ofgem decided npower had committed May 07-October 07.

There is no reason why Ofgem should not investigate the other two alleged breaches of the same condition.

Ofgem are described sometimes as a 'toothless tiger'. This is not the case. They have very big teeth but never bite anything. In this latest case they never even nibbled npower, let alone bit them. No fine or any sanction was imposed.

They have been granted huge powers. They were given these powers for a reason. They could for example fine a company up to 10% of its' turnover. The ultimate sanction is to revoke the licence to supply. One wonders what a company would have to do to receive such punishment. If sytematically defrauding customers over a long period of time is not worthy of such harsh penalties, then what is.
If they found npower in breach of their licence conditions on the other two occasions what then. A fine of 10% of turnover, reimbursement of who knows how many millions of ill-gotten gains to customers, loss of public confidence, etc. would probably spell the end of the company. It wouldn't be necessary (though desirable) to revoke their licence.

Perhaps with the state of the economy and associated job losses the last thing the country needs is a major U.K. operated company being dragged through the mire. The political climate is perhaps not well set for another swathe of bad news.

As you say, we are just guessing.