Npower Price Increase & Early Exit Fee

karslakep001

Under the Standard conditions of gas supply licence, which is part of the Gas Act 1986, the following paragraphs state that the domestic supply licence can be terminated without a Fee applicable upon a variation of the contract.

The Standard conditions of gas supply licence, which are applicable to this are as follows:-

Standard condition 24 paragraph 3, which states:-

Termination Fees
24.3 The licensee may include a term in a Domestic Supply Contract requiring a
Domestic Customer to pay a Termination Fee to end that contract except in any of
the following circumstances:
(a) the contract is of an indefinite length;

(b) without prejudice to sub-paragraph (a), the contract allows for both a fixed term period and a period of indefinite length and it is brought to an end during the period of indefinite length; or

(c) the licensee gives Notice of a unilateral variation of a term of the contract in accordance with paragraph 3 of standard condition 23 (Notification of Domestic Supply Contract terms) and paragraph 5 of that condition binds the licensee.

Standard condition 23 paragraph 3 states:-
Notification of unilateral variation
23.3 If, in accordance with the terms of a Domestic Supply Contract with a Domestic Customer, the licensee unilaterally varies a term of the contract:

(a) to increase the Charges for the Supply of Gas to a Domestic Premises; or

(b) in any other way that is to the significant disadvantage of the customer, the licensee must give Notice of that variation to the customer in accordance with
paragraph 23.4.

Also ensure that you read standard condition 44 paragraph 7, which states that upon termination of the contract under this standard condition, the supplier can't enforce the price increase.

hope this helps

Paul

Plushchris

From reading that it looks like it only applies to gas, if it works then you would still have to pay an exit fee on the electric?

MillicentBystander

Plus, if you haven't been with them for 12 months before you switch there's normally the not inconsiderable 'discount' of £105 that is only granted in the 13th month. Don't forget the switching sites (scandalously IMO) INCLUDE this figure in the savings they claim you will make switching to npower. This is IN ADDITION to the exit fees, btw.

Airmike23

But most power companies do not state the price will be guaranteed, just that whatever the standard tariff unit rate cost that company charge other tariffs will be a minimum of X% lower than said standard rate, therefore givingh the power company the wiggle room to change the unit rate cost as they are not deviating from the original terms of the tariff, i.e discount is still offered off standard unit rates offered by that company, also T+C's state that (if it is a variable unit rate tariff, which it would be to be included in this discussion) if there is a price increase unit rates offered by the tariff will increase inline with company increase.

Examples of the above are:
Npower signonline series of tariffs which guarantee to be 2% lower than unit rates charged to Npower standard cash/cheque customers.

EDF Online range of tariffs guarantee to be a minimum of 2% lower than their Standard tariff rates.

Save Online 2/4 from Eon guarantees to be a minimum of 6% lower than Eon standard unit rate costs.

Scottish Power Online energy saver series of tariffs guarantees to be lower than standard direct debit customers rates.

You get the idea, all these tariffs are rooted in the Standard rate offered by the power company in question, who can and will change their pricing as the "market" dictates.

Don't get me wrong I'm no supporter of these increases, they smack me as a cynical money making move, hitting the customer at the worst time of the year, particularly with National Grid saying we have a surplus of gas, and record profits being posted by power companies, but the above is absolutely useless and will get you nowhere, as the only type of tariffs the above could be attributed to is capped or fixed deals, which are as stated capped of fixed unit rate deals for set periods, and rates will not change (unless down in the case of a cap, if the power co makes a decrease).

karslakep001

There are standard conditions for the Electricity supply, which are the same as the Gas, please have a look on the OFGEM website.

backfoot

I always find it difficult to make head or tail of these legalese.

On the face of it, I would like to think you have hit upon something that would be of great benefit to us all.

You are obviously ahead of most of us so far. I would therefore ask the following questions:

1.Have you tested this against any exit fees levied by a supplier?
2.Have you sought any advice about it,from any Regulatory body?
3.What does Para 23.5 say?
4.Do you have any legal background?
5.What has put you on to this?

backfoot

Just to add, I also believe termination fees under variable price contracts are wrong and essentially anti competitive.

Having said that, if the clauses as they read, are saying that a price increase is sufficient reason to nullify a termination fee,wouldn't some Consumer body have raised this before? OFGEM,Consumer focus,Energy Ombudsman, Media etc.

backfoot

Airmike23 wrote: »

But most power companies do not state the price will be guaranteed, just that whatever the standard tariff unit rate cost that company charge other tariffs will be a minimum of X% lower than said standard rate, therefore givingh the power company the wiggle room to change the unit rate cost as they are not deviating from the original terms of the tariff, i.e discount is still offered off standard unit rates offered by that company, also T+C's state that (if it is a variable unit rate tariff, which it would be to be included in this discussion) if there is a price increase unit rates offered by the tariff will increase inline with company increase.

Isn't that covered in the Para. 23.3 (a )?

It's still an increase in charges. Doesn't say anything about standard tariffs/discounted etc.

karslakep001

1.Have you tested this against any exit fees levied by a supplier? Not yet but phoned them to tell them that i was sending them a letter, they said that was ok, but would you like to change to a different tariff and also still be eligable to the annual £100 discount.
2.Have you sought any advice about it,from any Regulatory body? No need these are the standard licence conditions for the supplier of gas, which should take precedence to any conditions which they give you.
3.What does Para 23.5 say? Read the Standard conditions of gas supply licence
4.Do you have any legal background? NO
5.What has put you on to this? Recieving late notification of price increase from EON, looked at the Standard conditions of the licence. which is for Gas and Electricity on the above mentioned website.

karslakep001

Airmike23: Yes that is perfectly true, however under the Standard conditions of gas/electricity supply licence should take precedence as it is part of the utility suppliers licence, and if they breech this they will be liable to a fine/penalty by OFGEM.

davidgmmafan

I think they are on dodgy ground charging it after a price increase and would back down pretty quickly.