MSE News: Escape energy lock-ins as prices soar

billykeats

What about with Scottish Power if I was to move from their Online Saver 10 to their fixed to 2014 tariff, would I still need to pay the exit fees?

fewkeste

midas67 wrote: »

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.

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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)).

This is good work - well done.

So if anyone has already told BG they intend to move because of the price rise and had the canellation fee(s) levied they should re-contact them and tell them fees are not allowed and to refund them.

Maybe OFGEM need to get involved and specifically instruct British Gas and other suppliers to:

1. Stop attempting to levy these charges where a customer leaves because of a price rise.

2. Make sure they refund customers they have already charged.

Comment for MSE staff.

This could be a watershed - a bit like MEAFs - how many people have in the past have been wrongly charged these exit fees (not just by BG) when they should not have been when they switch because of a price rise. Worth a campaign/TV appearance Martin?

ianfabris

I was with a Scottish Power fix until 31st July, but when they announced the prices rises the day after my fix ran out I decided to take the hit and took up a new fix with EDF while it was still available.

I did it though a price comparison site, and didn't inform Scottish Power that I was doing it. They called me last Friday and asked if the only reason for leaving was the price rise ... I said it was, so they offered me a deal to stay.

The deal doesn't match my EDF fix, so I won't be taking it up ... but I have now informed Scottish Power that I am terminating my contract due to the price rise, before the termination date ... but after I have already started switching .... does this apply

459160

Just read MSE post - rang Scottish Power straight away, very friendly, took cancellation details, and told me unprompted that I wouldn't have to pay the cancellation charge. A big contrast with the hassle others are getting from British Gas. Thanks MSE!!!

rowley

I have tried speaking to three different BG advisers and been repeatedly told that there was NO WAY they would waive the £60 early exit fee for websaver11. I have missed the cooling off period but still have no switch date for my electricity. The last lady I spoke to said the only way to get around it would be to switch to the BG standard pricing tariff, as my services are not yet being provided I would not be charged for this switch within the company. Now that that switch has gone through I am free to switch elsewhere without charges. Just hope the switch doesn't take too long!

pixiecat

I am on websaver 8 and have just rung british gas told the adviser about this web site he went to the site looked at the article, spoke to an supervisor who said that the tarrif I am on does not allow them to cancel the fee so if I want to change I have to pay
Can anyone tell me the exact terms I need to tell them that will get me out of paying fees please

Leon_W

A British Gas result !

Further to my earlier posts I have had a reply from BG, who, in all fairness have been very prompt and polite regarding my complaint.

I firstly received a call from BG which basically said they were sticking to their guns, as a Websaver 10 customer I was tied until Feb 2012 and would have to pay £60. I explained my position and that of OFGEM. Also for good measure I had a winge about how these tariffs are cleverly divised to tie customers to 20% rises over the expensive winter quarter, which was off the point but made me feel better. My concerns were noted but they were immovable. My only option would be to escalate the complaint further which I stated I was prepared to do. Thankyou very much, goodbye.

10 minutes later I get a call from another polite person asking, if they waived the cancellation fees as a goodwill gesture and kept my prices at the same level until the switch took place to EDF would I be happy ? Errr yes . They did not give a reason for the climbdown.

Result. No cancellation fees and prices frozen until I switch.

pixiecat

Just tried bg again after seeing leonw getting a result but the girl said she knows of not notification that fees will be wavered and I will have to pay £60 to change and the ofcom does not apply to my online websaver8 as it says they can change the amount charged, infact it is on all the websaver that are 6% below standard tarrif so I seem to be stuck on my contract or pay £60

Leon_W

pixiecat

I think you have to keep on at them. Escalate the complaint, go to a supervisor or manager. Use the complaints procedure on their website. Ultimately go to Ofgem.

Midas67 makes an excellent letter template that could be used.

In my own case they wouldn't say why they climbed down but they did.

pixiecat

Thanks for your answer, I have rung twice now, first time the person spoke to his supervisor and had this web page up to look at but they both declined, I have since rung in again and was told no way they would cancel fees so I have put in a complaint and quoted this web page again and fingers crossed they will let me out, the annoying thing is I only have till 1st October 2011 till my tariff ends so its not like they will be loosing loads if I leave unlike yourself who had another 6+months left.