MSE News: Escape energy lock-ins as prices soar

jalexa

Consumerist wrote: »

I would just point out that, if you read the original article, Ofgem have said that exit charges are payable on tariffs such as the WebSaver 11 but BG has decided to waive them on this occasion.

Indeed, though technically the article makes an assertion rather than a verbatim Ofgem quote.

I have read 24.3(c) very carefully. Either it says a termination fee can't be charged on the occasion of a price increase during the fixed term period of a "guaranteed discount" tariff, or it doesn't.

In which case the wording is too obscure for a typical "man in the street" to comprehend.

In which case it is time it was made understandable. Perhaps also for Ofgem's benefit.

Consumerist

jalexa wrote: »

I have read 24.3(c) very carefully. Either it says a termination fee can't be charged on the occasion of a price increase during the fixed term period of a "guaranteed discount" tariff, or it doesn't.

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.

Hope this clarifies Ofgem's view. I agree that the reasoning seems rather obscure. Indeed, I would say that there is a monetary definition of the standard rate - it is defined in the standard rate tariff. Since prices are rarely quoted in terms and conditions, it seems, as well, unlikely to require a change in a term to change the price. Ofgem nonsense, as usual.

jalexa

Consumerist wrote: »

Hope this clarifies Ofgem's view. I agree that the reasoning seems rather obscure.

I read the article as you have. My quibble (with the article) and/or Ofgem's "view" is that the Ofgem verbatim quote ceases immediately before the comment you "quoted".

I don't find your post unacceptable, it's welcome, I think the obscurity of the interpretation of 24.3(c), particularly an Ofgem "attributed" but not quoted remark to be consumer "unacceptable".

Frankly I can't understand the clause and I think the apparent variable British Gas and Scottish Power behaviour is because some people in these organsations can't understand it either.

grahamc2003

Consumerist wrote: »

Sorry, I thought it was at a 6% discount from standard tariff but I could be wrong.

British Gas Websaver 11 at a glance
Here are the main features of the british gas websaver 11 tariff that you can sign up for :

• A fixed 6% discount from their main standard tariff

Edit

I thought the conditions when i signed up was that it was a minimum 6% discount, and I was under the impression that my prices were (and still are) quitye a bit below 6% less than standard. I can't find the current standard rates, but my rates at the moment are (e7, seeboard region, inc vat)
tier 1 (1st 180pq), 25.53p/kwh
tier 2, 9.66
night, 4.08

Does anyone have the current bgas standard prices (online, I can only find the increased prices valid next month).

Edit, Just found this on one of my previous bills - seems to indicate it wasn't a fixed 6% discount...

On average, our electricity customers paying by Direct Debit on
WebSaver 11 currently pay 12.50% less than customers paying by

Direct Debit on our Standard Tariff*.

landsker

Climb down by email!
Quote:-
"
I am sorry that you had to contact us again about your enquiry.

Our system is designed in a way that it automatically applies a cancellation charge if an account is de-registered from the tariff before its end date. However, please do not worry about the cancellation charges, in case if these charges are applied to your accounts, you can reply to my email and I will be happy to waive them off for you.

I’ve addressed the issues you have raised and have now closed this query for you, if you have any future enquiries please reply back to me and I’ll be happy to help.

If you would like to review our Complaint Handling Procedure please visit our website or alternatively, reply to my email and I will arrange to send you a copy free of charge through the post.

Thank you for contacting British Gas.

We're listening, so tell us what you think - if you've got a moment please complete my survey to let me know how I've done"

jalexa

MSE_Guy wrote: »

This is the discussion thread for the following MSE News Story:

"Households faced with price hikes can use a loophole to escape the clutches of tariffs that appear to tie them in ..."

Given that Scottish and Southern Energy has today announced a price hike and that Atlantic Energy and Gas is a SSE company who's tariffs commonly feature "deferred discount", here is a "poser" for you.

How can customers on "deferred discount" tariffs (commonly Atlantic and NPower) avoid losing their accruing discount if they switch?????

I have read the Licence very carefully and can't see a "loophole".

riquolice

Just phoned BG and, after a 5 minute wait (I guess a lot of people are calling because of this same reason), got through to a pleasant chap called Matthew. He said he'd seen on their website that they are waiving early exit fees and, though he would normally put up a fight, would not be doing so today!

Job done! Thank you MSE for the tip off!

:T

happydaze30

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 called British Gas last night and the girl agreed straight away to waive the charges. I was on hold for a while until she completed the form. However, I see on another post that my new supplier must contact BG within two weeks or the penalty will be levied. She didn't tell me that! - and I don't know how to ensure this happens? This part is surely out of my hands!

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)).

Following my previous post above, where I sent a letter to British Gas customer complaints.I also E-mailed the following via their website yesterday

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.

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

Yet information from the following article on the Moneysaving expert website, contradicts the above.

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

Furthermore it quite clearly states on the - Standard conditions of
electricity/Gas supply licence - (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 above.

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

I have also sent a letter to your Complaints management team today giving more detailed information on the above.

I look forward to hearing from you shortly.

Regards

Michael Patrick

Today I just received the following E-mail reply from British Gas

[FONT=&quot]Dear Mr Patrick[/FONT]

[FONT=&quot]I'm sorry for the incorrect information you received about cancellation fee.[/FONT]

[FONT=&quot]Do not worry, as you have contacted us before 18 August 2011, cancellation fee will not be applicable on your accounts. However, due to error if the fees is applied, please contact us and we'll remove it form your accounts. We have also informed all our staff about this. [/FONT]

[FONT=&quot]However, I'm sorry to know you are thinking of leaving us. Please rethink on your decision. It is possible that you may get a better price with other suppliers now. However, you cannot guarantee that your new supplier will not increase the prices. All the supplier needs to maintain certain level of price, so it is not possible that one supplier increase their prices and others don't.[/FONT]

[FONT=&quot]There is no way of knowing when our competitors will increase prices but we are confident they will. So I suggest you to wait and see. To give you some comfort, if one of the big four suppliers do not announce a price increase by December 1st, we'll give you a £100.00 credit. So you've nothing to lose by staying with us. Also saving you the hassle of switching. [/FONT]

[FONT=&quot]Please contact us should you need any help in the future and thank you for contacting British Gas.[/FONT]

[FONT=&quot]We're listening, so tell us what you think - if you've got a moment please complete my survey to let me know how I've done.[/FONT]

[FONT=&quot]Kind regards [/FONT]

[FONT=&quot]Dipti Sabnis[/FONT]
[FONT=&quot]Customer Service Advisor[/FONT]

So hopefully everyone else will start getting some success as well, if it is true that they have informed all their staff about this.

For information I am on the websaver 8 tariff, which was due to end 1/10/11.

However based on the information above from the electricity/gas supply licence conditions no matter what BS they spout it should not matter what fixed tariff you are on they should not be charging an exit fee if you inform them you want to change supplier due to their price increase, before the 18/8/11 (date prices rise).

Also I have now got a great deal from EDF fixed price promise 2014, fixed price to March 2014 and not much more than what it would cost me after the British Gas price rises.

In fact what 'swung it for me' is that the direct debit amount per month will be the same as British Gas were charging me before their price rises, as I have now worked out they were overcharging me £22 per month!!! Rip off merchants.

I shall have to watch this from now on. They work out a Direct debit amount based on an average consumption, but I use a lot less.

Hence the moral is to inform your supplier of the actual amount of consumption over the year and work out the Direct debit amount based on that, rather than an average (if this works out cheaper of course!!)

So I hope everyone else will get some success from British Gas from now.

Please feel free to use my letter or E-mail above as a template, if it helps.

:mad:

I am so incensed by this attitutude from British Gas, in that the woman I spoke to yesterday was adamant that it was not possible to cancel the fee and spouted a load of rubbish at me.

Just shows me what privatisation really means - excessive profits for the company/shareholders and BS/excessive prices/hassle for the customer.

They are all working as a cartel.

I am going to write to OFGEM about this whole cancellation fee ripoff and will post a copy/their reply soon.

Good luck everyone and as always thank you MSE. :money:

Good to know someone is on our side!!!!

Regards

Michael

:T:T:)

mjmal51

midas 67, I am WS8 until 1st Oct the same as you. Have emailed them several times re. exit fees but they never reply to that part of the e mail only "sorry you are leaving etc."
Will use part of your e mail and try again!