Npower Investigation Update

DirectDebacle

Below is an extract from an article in TheTimes from last week.

Simon Hughes, the Liberal Democrat energy spokesman, called this week on the Government to give Ofgem, the energy regulator, more teeth and to refer the energy industry to the Competition Commission.

During parliamentary questions on energy and climate change on Thursday, Mr Hughes, MP for North Southwark and Bermondsey, said: “Given that energy ministers, in the past, and Ofgem, up to now, have been so feeble in dealing with the abuses by the big energy companies, will the Minister now commit that we will have the opportunity to have an energy Bill in the next session [of Parliament] where we can give real tough powers to Ofgem, and secondly, would he consider referring the energy industry to the Competition Commission?”

His call follows revelations in Times Money last Saturday that npower may have overcharged its 2.2 million gas customers by more than £100 million.
Consumer Focus, the consumer champion, has conducted an investigation, which shows that between April 2007 and April 2008, npower breached the terms and conditions of its energy licence, leading to potential overcharging of many customers.

Full article here:

http://www.timesonline.co.uk/tol/money/consumer_affairs/article6906344.ece

I understand there willl be another article in tomorrows edition.

It will be interesting to know what Consumer Focus have uncovered in their investigation. Hopefully they will reveal that soon. I anticipate it will be more in line with what we believe than the ludicrous conclusions Ofgem came up with.

DirectDebacle

More good stuff from The Times.

Even better from the plucky Miss Erskine.

npower can't even fight off a 79 year old lady.

I think the view from the npower boardroom window is going to be one of a continually gathering storm.

http://www.timesonline.co.uk/tol/money/consumer_affairs/article6915898.ece

Cardew

DD
The link in the Times article,to the Energywatch letter, is not working for me.

Mynewt

I truly hope something can be done espcially in the case of Npower. By far they are the most "devious" of all providers.

1 - Discounts paid annually (locks customer's in and increases vcash flow and interest)

2 - Seasonal weighting (increases an already large winter bill dramatically, again increasing cashflow for the provider)

3 - As mentioned above seemingly changing the definition of a year - so that you cna be charged more primary units in a calendar year, which would also have the knock on effect of removing your annual discount.

meggsy

Royal Mail worst Company with npower coming a close second ...

http://www.timesonline.co.uk/tol/money/article6915811.ece

Cardew, try this one, (I edited the first bit of the link) ... You will need a
magnifying glass though

http://timesonline.co.uk/multimedia/archive/00644/Energy_Letter_644932a.jpg

DirectDebacle

Cardew wrote: »

DD
The link in the Times article,to the Energywatch letter, is not working for me.

Nor me. I posted it on the old thread so here it is:

http://forums.moneysavingexpert.com/showthread.html?t=822299&page=69

From:
Sent: 07 March, 2008 12:32
To:
Subject: Formal referral of npower
Importance: High
Dear

I believe that you are aware that a (name deleted) has been in touch with energywatch unhappy at the way in which npower effected a change to its methodology for charging customers on its first tier of charges in April 2007. Essentially npower moved from a position of a seasonal percentage application of its first (and higher priced) tier to a flat application across the year to enable it to conduct a migration of customers from one billing platform to another. In November 2007, having completed the migration, it reverted back to the seasonal application. Whilst npower notified customers of its changes ahead of the November change in order to comply with licence condition 23, it did not do so in April 2007 because it was also implementing a price reduction.

Energywatch wishes to formally refer this matter to Ofgem to consider if a licence breach has occurred and/or if the actions of npower raise other issues that result in consumer detriment.

I attach a response we received from npower to questions we raised and also subsequent correspondence received from including a further letter from npower. I understand that you have the other case notes from us on this matter.

The issues we would raise are:

1. It appears to us that during the period of 1st May 2007 and 31st October 2007, the changes effected by npower to the way in which they apportioned their first (higher price) tier of charges resulted in a detriment to the consumer. During a period of the year, when the consumer would have had applied a lower percentage of the core first tier units, they were suddenly subjected to a higher proportion of those units than would have otherwise been the case.

2. npower suggest that they were under no obligation to inform their 2.2 million customers affected of this as they had reduced their prices (of the second tier) at the same time. We would suggest that this is a spurious argument, burying detriment in amongst a price reduction. At worst it is a licence breach (SLC 23), and at best it is an underhand way of introducing a measure that is detrimental to consumers without them knowing.

3, the fact that the two changes to the first tier structure were applied in the same 12 month period, must result in consumer detriment. What happened in previous and subsequent years where a full 12 months elapses and the benefits and detriments even out, is not relevant.

4. we are concerned that the npower first tier of more expensive units does not relate to a period covering a year, ie 12 months, but covers the 'tariff year". They define the "tariff year" as being the period 12 months from any tariff change. Thus in 2007, they had 2 tariff years and with their price changes in early 2008, another tariff year has occurred. That represents 3 "years" in less than actual 12 months period. This has had the effect of resetting the higher tier unit clock 3 times and thus in a subtle way their customers are paying for the higher rate units far in excess of the supposed 4,572 units per annum.

5. npower state that they factored into their price reduction in April 2007 the effects of the tier changes. There is no transparency of this to consumers or to energywatch and we would request Ofgem to review the methodology used by npower to verify if this detriment has been offset by the level of their price reduction. As a matter of principle we find such an opaque reason to be unacceptable as whilst on the one hand the change on the tier structure is quite clear to the consumer, any 'positive" changes are notably hidden.


I would formally request Ofgem to investigate this matter and respond to the particular circumstances of this case, a possible licence breach by npower and the policy issues we have raised

I have already written twice to Ofgem on the subject of their limited investigation and why they fell foul of the statutory time limit. Their response on both occasions was to lamely repeat that they ran out of time, but did not satisfactorily explain how this happened. I am now in the process of repeating this request asking for a more detailed response and also on other matters I have raised with them.

Bold type in the text is mine to highlight the periods of 12 months. Ofgem stated that they were only asked by energywatch to specifically investigate the 6 months May 07 - October07.

DirectDebacle

Mynewt wrote: »

- As mentioned above seemingly changing the definition of a year - so that you cna be charged more primary units in a calendar year, which would also have the knock on effect of removing your annual discount.

I don't think you need worry about the annual D.D. discount. That is calculated from the anniversary date that you join npower.

The year that npower invented, 'the tariff year,' is completely different to a calendar year. A 'tariff year' can quite unpredictably start or finish on any day in any month in any calendar year and is whole new way of calculating time.

I think they have stopped using it now because it wasn't too popular.

Mynewt

What I was referring to was their policy of removing the discount from customer's who changes tarriffs during the year. I remember vividly speak to a large number of their customer's whose tarriff ended mid-way through the calendar year and were informed by Npower that as they had a change of tarriff since the last reward, the clock started again on the date of change of tarriff.

DirectDebacle

I was referring to the 'tariff year' which was the subject of the Times articles and an investigation by Ofgem of the complaint submitted by energywatch, reproduced above.

We were at cross purposes because the word 'tariff has several meanings in npowerland.' I think your first post describing them as devious is spot on.

If indeed they are penalising loyal and long suffering customers by disregarding accumulated discounts just because they change to a different tariff, then that seems most unfair.

Mynewt

As you may have seen very little of Npower's practises could come even close to being described as "fair"

DVardysShadow

Perhaps someone should actually take them to the small claims court over accumulated discounts? A win would be good, but losing would give some grounds for satisfaction too, since, publicised well, it would damage the reputation of an nPower discount.