MSE News: Escape energy lock-ins as prices soar

sarahlondon24

cdsheldon wrote: »

I'm on British Gas WebSaver 11 tariff for electricity, and in my area, on the Economy 7 tariff, day units are going up by 23% and night units by a massive 38%. I've already asked British Gas if they will wave the £30 penalty charge if I switch to another suppler but they have told me they won't.

I have just got off the phone from British Gas and when I informed them I wanted to get out of my tarriff he advised there was a £30 charge after quoting the ofgem rules cited in the article they confirmed this was correct and I would not be charged to get out of my market monitor tariff that I was locked into until October 2011.

Thank you MSE!

Cardew

sarahlondon24 wrote: »

I have just got off the phone from British Gas and when I informed them I wanted to get out of my tarriff he advised there was a £30 charge after quoting the ofgem rules cited in the article they confirmed this was correct and I would not be charged to get out of my market monitor tariff that I was locked into until October 2011.

Thank you MSE!

As I read it, BG could charge you under the new ofgem guidelines, but BG and Scottish power have agreed to waive their rights to make this charge.

https://forums.moneysavingexpert.com/discussion/3359882

davidgmmafan

I've thought for sometime that they were on dodgy ground with these cancellation fees. For fixed term deals I reckon its fair enough, but for variable ones they're basically saying we can charge whatever we like as long as its below our hideously uncompetitive standard rate tariff.

However I really don't see what the Ofgem statement is getting at. It says you can have the fees waived unless its a variable rate which has some sort of guarantee with regards to tracking the standard rate.

Most of the cancellation fees relate to EXACTLY this time of tariff, why anyone would want to get out of a fixed rate is beyond me.

From what I can tell Ofgem's position is hopeless, but fortunately the suppliers have decided to play it say as even they realise they're trying to have it all ways...

landsker

I'm on Websaver11 and wrote to British Gas requesting confirmation that the leaving fees won't apply. I quoted the relevant part of Martin's posting about fee waivibg and my request was just ignored!

I received this by way of van answer:-
"
I’m sorry to learn that you’re thinking about changing supplier on the back of our recent price change announcement.

Currently your accounts are registered for our WebSaver 11 tariff. As stated in your email about informing customers about the price rise, we have informed well in advance by correspondence or email. Our website will also have the information regarding the same.

Although you’ve incurred our latest price increase, if you wish to protect yourself from future increases by joining a price protected tariff, Price Promise March 2013 offers peace of mind in a volatile energy market and guarantees no more price increases until 31 March 2013. However, if you wish to opt for this fixed tariff there are cancellation charges of £30.00 per fuel on your current tariff."
I have just sent this:-
You did not answer my request for confirmation that cancellation fees will NOT apply:-
I quote:-
"Even if a customer is on a fixed term deal with an early termination fee, they will not have to pay a termination fee if they notify their current supplier of their intention to switch on or before the day the change takes place."

It would seem clear that this is the case, as I have been disadvantaged by this alteration to the tariff by the increase in charges.

Again I quote:-"Technically, not all customers on variable deals are eligible to escape charges. However, British Gas and Scottish Power say they will waive fees on all variable tariffs. An Ofgem spokeswoman says: "Under Supply Licence Condition 23 (SLC 23), suppliers have to inform customers at least 30 days in advance of any change to their contract that would significantly disadvantage the customer or increase charges.
"Even if a customer is on a fixed term deal with an early termination fee, they will not have to pay a termination fee if they notify their current supplier of their intention to switch on or before the day the change takes place."

This seems unambiguous and I repeat my request that you will confirm there will be NO CANCELLATION charges should I decide to shift tariff or supplier as a result of this increase.
Should you not agree with this, I would request your detailed reasons, in writing, why your Company's assurances, mentioned above, will not apply.
Thank you,

Leon_W

So, apart from the MSE article where is confirmation from a BG "spokesman" of the cancellation fee waiver ?

It's no good if we can't get proof from the horses mouth.


I have sent the following to BG and await their response....

Dear XXX


Regarding our recent conversation regarding the cancellation fees you wish to apply I refer you to this article at MoneySavingExpert.co.uk which is run by financial journalist Martin Lewis.


http://www.moneysavingexpert.com/news/utilities/2011/07/escape-energy-lock-ins-as-prices-soar


Further to this, under the standard conditions of gas/electricity supply licence 24.3 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.


And 23.3...

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



Therefore I feel that cancellation fees are not payable because of the increased charges for the the supply of gas to a domestic premises point 23.3(a) . which is a unilateral variation of a term of the contract 24.3 (c) hence no termination fee can be charged.


Please let me know your thoughts.


Kind Regards

Leon_W

U-Switch have followed this up and are reporting similar

http://www.uswitch.com/news/utilities/loophole-lets-energy-customers-avoid-exit-penalties-900000597/

British Gas will be inundated with complaints if this is not clarified.

lektr0n

Under those rules, Ofgem stresses not all variable rate customers are eligible to escape their exit fee, such as where there is no change in the contract term.
In particular, this applies to customers whose deal tracks their suppliers' standard rate by giving a percentage discount off that price.
Such a contract would allow for a rise as there is no monetary definition of the standard rate.

I'm not sure where the anonymous Ofgem spokeswoman has pulled that from but in Ofgem’s draft guidance on sub-paragraph 3(a) and 3(b) of SLC 23...

In Ofgem’s view the expression “to increase the Charges for the Supply of [Gas/Electricity]…” is likely to capture an increase in any of the following charges:

• standing charges;
• unit charges (including any unit rate which forms part of a multiple unit rate tariff structure for e.g. E7, E10, DTS);
• ...

My unit charges are being increased (both Tier 1 and 2) on August 18 which means the termination fees can't be charged regardless of any clause in the suppliers terms which give a minimum discount over the Tier 2 rate of the standard tariff.

rdwarf12

rdwarf12 wrote: »

I just received / read this article today (Wednesday)
http://www.moneysavingexpert.com/news/utilities/2011/07/escape-energy-lock-ins-as-prices-soar

I switched yesterday using a cash back link and the EDF website.

My question is can I still avoid exit charges ?
What do I need to do ?

Is it as simple as let British gas know I have just switched and I want to not pay the exit charges.

Or will I qualify auotmatically ?

I just decided to call and wing it. I told the call center operative the story quoting MSE information.
She took a few minutes to talk to a supervisor, then advised me that all is OK and the exit fee's will be waived. I got zero arguments. The call was made at 11.35 today. So a result !!!...

midas67

I have also submitted the following letter to Bgas, following their ludicrous price increases (I tried to do this online but kept saying system error - probably too long!!)

I will let you know when I get a reply.

Also thanks for post from lektrOn which gave me the information on the supply licence terms which I followed up.

---

I phoned one of your call centre staff this morning and advised that I was intending to switch my supplier before the tariff increases from the 18th August 2011, and asking for the early termination fee to be waived.

I calculated that the tariff increases would result in my paying an additional 25% more for my gas and electricity over the year, which is unacceptable.

However I was surprised when she said it was not possible to cancel the early termination fee/charge.

I attach information from the Moneysaving Expert website and Standard conditions of electricity and gas supply licence, which quite clearly show (condition 24.3(c)) you cannot charge a termination fee if the contract is ended because of a variation in the contract term, such as with an increase of charges (condition 23.3(a)).

I would therefore ask that you confirm in writing that as I am intending to change my supplier due to your notification of a price increase, I will therefore not be charged the £60 cancellation fee on my account, as the details provided.

I also ask that you urgently inform your call centre staff of the above information to prevent other customers being misinformed.

I look forward to hearing from you shortly.

Yours sincerely

Michael Patrick

Information from Moneysaving expert website

Information from the following article as per link below:-

moneysavingexpert.com/news/utilities/2011/07/escape-energy-lock-ins-as-prices-soar

It quite clearly states:-

"But where a supplier puts prices up, because that results in a contract change that's detrimental, rules from regulator Ofgem mean many consumers don't need to pay that penalty as long as they inform their power firm they wish to switch before the increase"

"An Ofgem spokeswoman says: "Under Supply Licence Condition 23 (SLC 23), suppliers have to inform customers at least 30 days in advance of any change to their contract that would significantly disadvantage the customer or increase charges.

"Even if a customer is on a fixed term deal with an early termination fee, they will not have to pay a termination fee if they notify their current supplier of their intention to switch on or before the day the change takes place."

A British Gas spokesman says: "For customers on a variable price deal, they have at least 30 days before the price change takes effect to contact us and move to another deal or supplier without charge."

Standard conditions of Electricity/Gas supply licence

To elaborate it quite clearly states on the ELECTRICITY ACT 1989 - Standard conditions of electricity supply licence

(copy of licence obtainable from
epr.ofgem.gov.uk/index.php?pk=folder430120)

Page 67 - 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 sub-paragraph 6(a) of that condition

binds the licensee.

P65 - 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 Electricity 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.

The same terms are also included in the GAS ACT 1986 - Standard conditions of gas supply licence on pages 65 and 63

(copy of licence obtainable from epr.ofgem.gov.uk/index.php?pk=folder430788)

Therefore the above quite clearly shows (condition 24.3(c)) you cannot charge a termination fee if the contract is ended because of a variation in the contract term, such as with an increase of charges (condition 23.3(a)).

DonnySaver

I know somebody who is on British Gas Market Monitor tariff. This is due to end in October 2011. However, he's had a letter stating that the prices are changing. He now wants to leave British Gas.

Am I now right in thinking that he can leave British Gas without penalty even though he's not on a variable tariff contract?

Response appreciated. Thank you.