Npower threatened with legal action by Consumer Focus re over charging

undaunted

Legal action threat hangs over npower

Energy supplier holds talks on compensation as new charging allegations emerge

Mark Atherton

Consumer Focus issued a threat of legal action against npower this week as the two sides haggle over compensation after the energy supplier was accused of overcharging two million customers.
A spokeswoman for the watchdog says: “The Consumer Focus board has this week signalled that we would support consumers through legal action if the discussions founder.”

It is understood that Consumer Focus has taken legal advice and is prepared to launch a court case against npower if the energy group does not come up with an appropriate compensation offer.

Last month Times Money revealed that Consumer Focus had carried out a study which concluded that in 2007-08 npower had overcharged its 2.2 million gas customers by £100 million — or an average of £47 per household. The watchdog passed details of the study to David Kidney, the Energy Minister. The same week npower reopened talks about customer compensation with Consumer Focus.


But the overcharging may go back even farther. As pressure mounts on npower to offer compensation, Times Money has uncovered evidence that the overcharging was taking place in 2004-05.

Andy Beck, a Times reader, from Teignmouth, Devon, says: “There is a similar pattern of overcharging. Then, as now, npower undertook in its contract to charge the first 4,572 units of gas per annum at the higher of two tariffs and the remainder at the lower rate.

“But at the end of the year April 1, 2004, to March 31, 2005, I found that npower had charged me 5,470 units at the higher rate — 898 units more than the agreed maximum. Since the difference between the higher and lower rates worked out at 1.43p per unit, this amounted to an overcharge of £12.84.

“If npower’s estimated two million customers were all overcharged a similar amount to me, that would amount to a collective overcharging of £25.6 million. If this is added to the estimated £100 million in 2007-08, that would make a total overcharge of £125.6 million.”

The alleged overcharging in 2004-05 seems to have arisen for the same reason that it happened in 2007-08. Halfway through the year — October 1 — npower switched from a system where it spread the higher rate units evenly across each of the 12 months (a flat rate) to one in which it allotted more higher rate units to the winter months (a seasonal, or “sculpted” rate). The effect of combining the different methods of charging resulted in too many units being charged at the higher rate over a 12-month period.

Mr Beck adds: “There was no notification of this change in the system of charging and no mention that it could result in customers being charged more than the agreed number of 4,572 higher rate units per annum. What’s more, the change was introduced together with a price rise so npower cannot argue that the overcharging on the higher rate units was balanced out by a cut in gas prices.”

Times Money has passed on details of Mr Beck’s claims to Consumer Focus, Mr Kidney and to npower.

A spokesman for npower says: “Not all customers were in the same position as Mr Beck in 2004-05 so he cannot assume they were affected in the same way. When we moved in 2003 from making a standing charge to a two-tier tariff for our gas customers, our terms included the ability to make seasonal adjustments to the higher rate tariff.

“We are having discussions with Consumer Focus and we hope they will come to a satisfactory conclusion.”




http://www.timesonline.co.uk/tol/money/consumer_affairs/article7042494.ece

Couldn't happen to a "nicer" company in my opinion - Npower have historically rated bottom amongst providers for referred complaints & disconnections in both Ofgem and Consumer reports so if it brings them into line one way or another I say :T

An earlier related article here http://www.timesonline.co.uk/tol/money/consumer_affairs/article3994954.ece

Anyone know whether it's been resolved or gone any further yet?

Premier_2

Any progress on this?

It was published last February. Is the MP involved still an MP???

undaunted

I don't know whether there is any progress on the above issue, I've only just come across it myself but shall now be trying to find out.

Re the MP I assume you refer to my post on the other thread. That is in fact a second and unconnected case re electricity supply rather than gas. The MP is currently an MP and has contacted Npower in the past week in an attempt to reach a resolution which is mutually acceptable to each party without need for Court or other action.

Both the Consumer and Npower have however so far failed to budge and are at present adamant that they shall defend their position in court.

Premier_2

No. I'm referring to the (ex-)MP in the article, David Kidney Energy Minister.

There's been a general election since that article was written, remember?

Kidney was labour and lost his seat in that election afaik ... so he's no longer energy minister.

undaunted

Yes I do remember the Election, I even voted in it though none of us quite got what we voted for did we?

I don't however believe that David Kidney no longer being Energy Minister (or indeed an MP) will automatically mean that the dispute has not been brought to the attention of and passed to the responsibility of his successor,

meggsy

Just noticed this thread while looking for any updates as it has gone a little bit quiet but here is Andy Becks (DD) thread he started about 6 months ago

https://forums.moneysavingexpert.com/discussion/2077559

undaunted

Thanks for the link, interesting if unsurprising. Consumer Focus were asked what had become of this recently but failed to respond on it.