MSE News: Npower to pay £70m in refunds after billing blunder

edited 1 October 2010 at 1:48AM in Energy
174 replies 21.4K views
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  • megzmammegzmam Forumite
    165 Posts
    just seen this thread i used to be an n-power customer at my old property a few years ago.
    I recieved a letter from them a couple of days ago saying they would like to give me £54.00 which of course i will happily accept!!!
    Confirmed a few details and they told me they'd send me another letter in about 8-10 weeks to take to post office to get my money back Whoohoo!!!
  • hgm wrote: »
    I have just received a phone call back from nPower with an attempt at explanation. Details are going to be posted to me.
    What I think she said was that the calculation for a billing year is being done by working out how much it would have cost for PB units with the old method of equal months and comparing it with the cost for the year with weighted method. As there was a price increase 4/1/08 it means that fewer units are charged at the new increased price. The effect on the whole year is an undercharge. It didn't matter that more than 4572 were charged if the overall figure was cheaper. Her explanation for that was "It's complicated".
    Even more worrying was her statement that it was a final amount - take it or leave it - I could send a response within 10 days of receiving the breakdown explanation but they wouldn't issue a Deadlock letter to take the complaint further.

    Thanks for the info. It will be interesting to see their full explanation.

    I find the sentence I highlighted concerning. Clearly it does matter that more than 4572 are charged and it matters at what date the 4572 units are reached.

    If npower are now comparing what they actually charged on bills to what would have been charged per month using a flat 381 per month profile then this will make a big difference to some customers.

    As I explained in previous posts it is a fallacy to make this monthly comparison.

    I believe the only correct method is, from your bills, add up the P.B. units from your start date until you reach 4572. If any units have been charged after that point then they need to be totalled up to your end date. The cost is calculated at the relevant price(s) and that is what you have been overcharged, VAT & int to add.

    Without re-writing the 'sculpting' thread npower have ignored the reasons they are now re-imbursing customers.

    Re-calculating bills as if the changes had not taken place can only be done if certain standard licence conditions are met. npower failed to comply with them. Individuals were making claims against npower on this basis and claiming overcharged units from the point in their year that the 4572 had been exceeded. Court proceedings were started in some cases and npower settled these claims rather than defend them.

    This was long before Ofgem completed their investigation into this matter and concluded that npower were in breach of their licence conditions.

    Your argument with npower is their chosen method of calculating payments. They should not be comparing bills to any previous profiles as if they had acted properly. The only comparison worth making is with a year that 4572 are charged for and one that is not. Monthly amounts are irrelevant except for determining the point in the year the 4572 are exceeded.

    For your years there are four prices to consider.The price you joined at and the changes on 30/4/07, 4/1/08 and 29/8/08.

    Under a flat profile of 381 per month the maximum you could have been charged is 4572 and are split by the prices as follows

    6/9/06 - 30/4/07 = 2984
    30/4/07 - 5/9/07 = 1588

    Total = 4572

    For the same year but under a weighted profile (it is not clear whether npower have used a flat rate from 6/9/06 to 30/4/07 or a weighted profile they used during this time). I have used the weighted profile for this part of your year.


    6/9/06 - 30/4/07 = 3804

    The profile from 1/5/07-5/9/07 is a flat 381.

    30/4/07 - 5/9/07 = 1587

    Total = 5391

    Excess units 820. (They calculate 932) Use your known prices to calculate costs.

    Using a price differential of 2.497p

    820 = £20.48 or
    932 = £23.27 add Vat & int.

    The excess units will appear on bills at the end of your year and after the price change of 30/4/06.


    Repeating the above for 6/9/07 - 5/9/08 and the last two price changes.

    Flat

    6/9/07 - 4/1/08 = 1510
    4/1/08 - 29/8/08 = 2974
    29/8/08 - 5/9/08 = 88

    Total = 4572

    Weighted

    6/9/07 - 4/1/08 = 2576
    4/1/08 - 29/8/08 =2345
    29/8/08 - 5/9/08 = 11

    Total = 4932

    Difference of 360 (They calculate 389)

    349 charged at your 4/1/08 price and the remaining 11 at the 29/8/08 price.

    If a ball park 3.75p is used to calculate 360 units = £13.50 plus VAT & int.

    Their 389 units @3.75 = £14.58p

    About as good as I can get without seeing your bills and knowing your prices. However it shows that their method is to your disadvantage and they have openly told you that this is why they are doing it.
  • hgmhgm Forumite
    62 Posts
    Part of the Furniture
    Thanks for all the calculations DD. I will post again when I get their letter of explanation. She was very insistent that there could be negative results but if the whole answer was negative that they wouldn't ask for the money back.
  • hgm wrote: »
    . She was very insistent that there could be negative results but if the whole answer was negative that they wouldn't ask for the money back.

    That's nice of them.

    Do you know your prices at that time. Make the calculations more relevant if I knew them.
  • luxor4tluxor4t Forumite
    11.1K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    ✭✭✭✭✭
    £27.35 will be on its way to us eventually :D
    I can cook and sew, make flowers grow.
  • I phoned npower because I hadn't received a letter. They said it was because the amount I overpaid in the 1st anniversary year ((27 oct 2006-26 oct 2007) was more than outweighd by the amount I had underpaid in the 2nd anniversary year (27 oct 2007-26 oct 2008).

    I have now received the letter I asked for with the breakdown.
    2006-7 Excess primary units 932 Value £17.90
    2007-8 Excess primary units 18 Value -£21.80
    Subtotal -£3.93

    I have just phoned to ask them how I can owe the money to them for the 18 excess primary units they charged me. They are sending me a letter to explain how the -£21.80 has been worked out. They say it is to do with the rate I was paying per unit during 2007-2008.......

    I will post the next details when they arrive. I fail to see how this can possibly be correct though. I wonder how many other people are not receiving a refund for a similar reason?
    KE veteran - life seemed so much simpler then!
  • I phoned npower because I hadn't received a letter. They said it was because the amount I overpaid in the 1st anniversary year ((27 oct 2006-26 oct 2007) was more than outweighd by the amount I had underpaid in the 2nd anniversary year (27 oct 2007-26 oct 2008).

    I have now received the letter I asked for with the breakdown.
    2006-7 Excess primary units 932 Value £17.90
    2007-8 Excess primary units 18 Value -£21.80
    Subtotal -£3.93

    I have just phoned to ask them how I can owe the money to them for the 18 excess primary units they charged me. They are sending me a letter to explain how the -£21.80 has been worked out. They say it is to do with the rate I was paying per unit during 2007-2008.......

    I will post the next details when they arrive. I fail to see how this can possibly be correct though. I wonder how many other people are not receiving a refund for a similar reason?

    See my posts above.

    As far as I can tell they are calculating your bills as if you were being charged at an even rate of 381 per month. They are comparing the cost of these monthly units to the monthly cost of the units on your bills using the (uneven) weighted amounts applied.

    For your October year you were charged at 381/31*5 for October and then a maximum of 882 for Nov, Dec, Jan & Feb.
    March 272, April and October 271 and 46 each for May, Jun, Jul, Aug & Sept.

    As you can see (easier if you write them as a list side by side) up to Feb 08 you were charged for more units per month on your bills than on the flat comparison profile.
    From March onwards the position is then reversed and they say you owe them.

    There is a marked difference in the summer months.

    The 06/07 year had a more evenly weighted profile and from May-Oct 07 was a flat 381 rate, hence you don't owe money for that year.

    Having a start date at the end of October will produce the lowest overcharges in any event. To have this reduced even further is disgraceful.

    This is how I beleive they are arriving at 'undercharges' for, I suspect, many customers.

    It is perverse. If you had only joined them in October 2007 you would in theory be sending them more money because they obviously hadn't overcharged you enough:(. Most unlike the npower we have come to know and love.

    At least they have said if an account is in overall debit they won't be asking for the money.

    I had been wondering what was wrong with simply totalling the number of high rate units charged in a year, working out what they cost and refunding them if they were over 4572. Now we know.
  • edited 20 November 2010 at 8:37PM
    fluffpotfluffpot Forumite
    1.3K Posts
    ✭✭✭
    edited 20 November 2010 at 8:37PM
    Hi everyone

    I have just received a letter from Npower saying that they will refund me £66! I would just like to express my thanks to all who spent time, energy and money in getting this little victory! I would be very pleased to donate my refund to a charity of their choosing - I seem to remember reading about the chap who started it all ages ago, but can anyone tell me who he is? Does he hang out here????

    Fluff

    OH, have just scanned s bit further down the first page and see that Direct Debacle is our man! Well done you! I'm going to PM you right now!
  • Should be receiving £23 from them shortly!

    Not much, but better than a slap round the chops with a wet kipper!
  • hgmhgm Forumite
    62 Posts
    Part of the Furniture
    That's nice of them.

    Do you know your prices at that time. Make the calculations more relevant if I knew them.
    Charges (ex VAT) 06/09/06 to 28/04/07 were:
    PB 4.412p SB 2.492p
    29/04/07 to 03/01/08: PB 4.412p SB 1.915p
    04/01/08 to 27/08/08: PB 6.556p SB 1.990p
    28/08/08 to 05/09/08: PB 8.261p SB 2.507p

    Have you any evidence from Consumer Focus on any agreed method of calculating the repayment? Because nPower said it had been agreed to use the yearly method with the negative amounts. I don't think nPower will take much notice if I just say "DirectDebacle says it should be calculated a different way".
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