NPower gas 'sculpting'

Cardew

As stated a shameful document.

IMO the most important failure of ofgem is their meek acceptance that Npower could start a 'new tariff year'.

The report uses the term "Npower considered" several times and that term seems not to be challenged or even questioned in any way, shape or form.

DirectDebacle

Thank you for posting this summary Sterling. If it is a true account of Ofgems' actions and interpretation of the current legislation then it shows, as far as consumer protection goes that;

1. Ofgem are not fit for purpose
2. The legislation needs amending.

Ofgem have sent me nothing like this communication to Consumer Focus. I have not received all I requested yet.

What they have sent confirms that Ofgem were aware of customer complaints re 'sculpting' prior to April, 2007. They were aware of the principle of the 'tarrif year' and have taken it as acceptable practice. I have not seen any documentation so far which challenged the validity of such a principle.

In fact every piece of information provided by npower to Ofgem appears to have been accepted without question. Even the graph and accompanying statement 'proving' that for the year May 2007-April 2008, NO CUSTOMERS were overcharged seems to be good enough for Ofgem. Apparently Ofgem were reassured that npower did properly notify customers of the change on November 1st, 2007. I guess I was the only one of 2.2m customers that didn't receive it. Now I know why npower paid my claim. Lucky me:rolleyes:

I feel there is something seriously wrong here. Either the legislation is weak or Ofgem are so steeped in the mire of those they purport to regulate that their ability to protect consumers has been compromised.

When I have received everything Ofgem have decided they are at liberty to disclose then I can assess what they have based their decision on.

As things stand there seems to have been no change. All npower say they will now do is within an agreement with Ofgem. There has been no enforcement or change to the regulations to prevent future instances.

DirectDebacle

I have a letter written in May, 2008, by an MP on behalf of overcharged constituents to Sir John Mogg, chairman of Ofgem. Because of redaction it is not clear if the next letter in August, 2008, is the response from Ofgem to the MP. Nevertheless the letter is interesting and I quote,

"My point in writing to you is to pick out the following sentence on the website,

'The primary rate applies to the first 4572 kWh (units) of gas... that you may use throughout any continuous period of twelve months '

This is more precise than any previous definition of the 'tariff year'. I have asked if this is a change of policy for Npower. If applied retrospectively it would resolve the outstanding problem regarding the charges in 2006-2007. What do you think?"

I know what I think. I think that letter in August was fleshed out a bit and became Ofgems statement to Consumer Focus eight months later.

Sterling

Further to my post #1124, here is a copy of my email to Consumer Focus in reply.

Hi

Very many thanks indeed for your email yesterday plus copy documentation from Ofgem. I have now posted the Ofgem document on the moneysavingexpert “npower gas sculpting” forum thread; where I suspect it is already attracting severe criticism (as indeed it should).

One point has been made this morning, which I strongly recommend that you take a look at as soon as possible, as I’m sure you will consider it (as I do) of fundamental importance, and clear evidence of the utter falsehood of the “tariff year” excuse and possible connivance as regards its retrospective use to quell complaints. It is in post #1128 (made at 09:26 this morning by DirectDebacle.

As you will have seen from the said thread, the contributor “DirectDebacle” has attempted to obtain as much relevant information as possible from Ofgem (concerning its said investigation) under the Freedom of Information Act. And this is how the above came into his hands.

As you will also have seen, Ofgem has indicated that it will withhold pretty much everything that relates to its communications with npower. I can understand the occasional line of text being deleted, or even the odd paragraph (if there are genuine grounds to do so) but a blanket refusal to disclose as much information as Ofgem intends seem highly suspicious to me.

As you can imagine I have quite a few comments to make about the Ofgem document myself, but I will make them all on the thread, rather than here, so as to keep this email to a minimum.

Thank you also for offering to keep me updated on what your further investigations uncover. I look forward to hearing from you in due course.

Kind regards

DirectDebacle

Having had a little time to digest the Ofgem release I have had some further thoughts on the matter.

Aside from its' regulatory duties Ofgem has a role to play in consumer protection. Energywatch presented Ofgem with a 'problem'. From the complaints submitted to Energywatch and forwarded to Ofgem with their complaint, Ofgem had to make a decision as to which approach to take in dealing with the complaint. They could look at it from an industry point of view or from a customers point of view. It seems they are not capable of examining the two sides of a story and reaching a balanced conclusion.

IMO it would seem that Ofgem chose to look at this as an industry problem and would therefore work with npower in order to resolve it. To say they investigated the matter would be an overstatement. It has all the appearance of a collaboration.

In order for Ofgem to have reached the conclusion they did, one vital piece of evidence submitted by npower had to be believed. That was the invention and implementation of the 'tariff year'. Without that all of npowers' submissions collapse like a house of cards. Ofgem have accepted the 'tariff year' without question, conveniently enabling them to do, more or less, nothing.

'It is difficult to get a man to understand something when his salary depends upon his not understanding it.'

npowers case was this. They calculated the effect of the changes made on 1st May projected over the next 12 months. They concluded that as a result of the changes NO customers would be disadvantaged and therefore there was no requirement to notify the changes.

npower have further stated to Ofgem that a similar projection of the 12 months from (the changes made on) 1st November, 2007 that there would be no customers disadvantaged. npower also stated that these November changes were properly notified.

Ofgem then confined themselves to examining the effect of the changes for the year 1st May 2007-31st October, 2007. As they had accepted the 'tariff year', this is the year they would be looking at. It was clear that no customers had been charged more than 4572kWh for that year. They did find that a few customers would have been disadvantaged. There were meetings in Peterlee between npower and Ofgem to discuss this fact. npower put forward proposals to Ofgem which Ofgem found acceptable.

There is correspondence from npower to Ofgem. I have not had sight of any correspondence from Ofgem to npower. So far there is no evidence, other than the original contact, between Ofgem and Energywatch nor any communication between Ofgem and any individual customers who submitted complaints to energywatch.

To facilitate a fair outcome of an investigation it requires the evidence from all sides to be heard and examined.

To listen to just one party in a dispute, believe everything they tell you without question and come to a balanced judgement is almost impossible. It strikes me that Ofgem have taken the view that npower made a technical breach of their licence conditions. Further that this breach was made in the belief that npower were genuinely attempting to reduce their prices for customers. A sure sign to Ofgem that the 'market is working' and a positive indicator that Ofgems' role is being fulfilled. If you were a member of Ofgem, wouldn't you like to hear that?

I was wrong to think that the 'tariff year' had died of its' own ridiculousness. Apparently its' germs have spread to and infected Ofgem.

It seems to me that the reputation of an industry and its' regulator was of far more importance than the protection of the consumer.

Sterling

Here is a reply from my contact at Consumer Focus in response to my email sent earlier today (and posted in #1129 above)

“Thanks for this [Sterling]. We’ve been keeping up-to-date on the forum – DirectDebacle is indeed a legend!”

Says it all really.

Cardew

As we all agree, the apparent acceptance by ofgem that NPower can define the length of a year is as disgraceful as it is ludicrous.

We now have a situation where an unholy alliance of NPower and ofgem will close ranks. It is a racing certainty that the tactic will be to procrastinate.

I hope Consumer Focus have sufficient clout to take this matter forward, my fear is they haven’t.

Quite simply ofgem should be ashamed!

DirectDebacle

I anticipated something like this from Ofgem so I made enquiries as to which other authority could be asked to investigate. Below is the response I received to my enquiry.

'Thank you for your email dated 17 March 2009 to the Parliamentary Ombudsman regarding your complaint about the Office of Gas and Electricity Markets (Ofgem). I apologise for the delay in my response.

The Parliamentary Ombudsman can consider complaints about Ofgem where there is evidence that they have not acted properly or fairly, or have provided a poor service. However, I should explain that before we consider a complaint, you are expected to have exhausted Ofgem's complaints procedure. Your complaint to us also needs to be referred by a Member of Parliament (MP).

From the content of your email it is unclear as to whether or not you have already made a formal complaint to Ofgem. Therefore, if you have not done so already I would advise you to make a formal complaint to Ofgem and ask them to resolve your concerns. For your information I have attached a fact sheet which explains in detail Ofgem's complaints procedure.

Once you have exhausted Ofgem's complaints process, if you remain unhappy then you can re-approach the Ombudsman with your complaint. However, only an MP can make a complaint to us (on your behalf) about government departments, agencies or organisations. We cannot investigate a complaint until an MP has asked us to do so. That means that, you need to write to your local MP and ask them to refer your case to the Ombudsman.

You can contact the House of Commons Switchboard on 020 7219 3000 in order to obtain your MP's contact details.

All MPs can be contacted at the following address:

House of Commons
London
SW1A 0AA Alternatively, you can find out details of your local MP via: www.upmystreet.com/commons/l/
To help your MP to understand your complaint, you should give them the following information.
- An explanation of what the problem is.
- A brief history of what happened, and when, including responses to your complaint so far.
- Copies of the letters and papers which are relevant to the complaint.
- Details of what you want done to put things right.

Having looked at your complaint your MP will let you know the best way to deal with it. If your MP does ask us to investigate your case, we will look carefully at all the information you have provided and send you, and your MP, a reply telling you what we are going to do about it.
We aim to give the best possible service to our customers. If you are dissatisfied with the standard of service you have received from us or if you have concerns about the decision we have reached in your case you may pursue your concerns through our complaints procedure. If you would like further information about our complaints procedure please contact us on 0345 061 4076 or by e-mail at [EMAIL="complaintsaboutphso@ombudsman.org.uk"]complaintsaboutphso@ombudsman.org.uk[/EMAIL] or by writing to the Review Team Manager at the address given on this email. Alternatively, details about our complaints procedure are available from our website at [URL="blocked::outbind://10/www.ombudsman.org.uk"]www.ombudsman.org.uk[/URL].
Finally, we may contact you in the future to take part in some research to improve our services. If you would prefer not to take part, please call us on 0345 015 4033.
If you would like to discuss your complaint with me, please do not hesitate to contact me at the address or telephone number on this email.'

Yours sincerely

Parliamentary and Health Service Ombudsman

Millbank Tower

Millbank

London
SW1P 4QP

Telephone: 0345 015 4033

One for the backburner at the moment.

Link to Ofgem complaints procedure :
http://www.ofgem.gov.uk/About%20us/Documents1/14751_complaint.pdf

Sterling

DirectDebacle wrote: »

Ofgem have sent me nothing like this communication to Consumer Focus. I have not received all I requested yet.

DD – has Ofgem by any chance sent you a copy of the original Energywatch complaint yet?

DirectDebacle

Here it is. Taken me ages to convert it to put on here.


From:
Sent: 07 March, 2008 12:32
To:
Subject: Formal referral of npower
Importance: High

Dear
I believe that you are aware that a has been in touch with energywatch unhappy at the way in which npower effected a change to its methodology for charging customers on its first tier of charges in April 2007. Essentially npower moved from a position of a seasonal percentage application of its first (and higher priced) tier to a flat application across the year to enable it to conduct a migration of customers from one billing platform to another. In November 2007, having completed the migration, it reverted back to the seasonal application. Whilst npower notified customers of its changes ahead of the November change in order to comply with licence condition 23, it did not do so in April 2007 because it was also implementing a price reduction.

Energywatch wishes to formally refer this matter to Ofgem to consider if a licence breach has occurred and/or if the actions of npower raise other issues that result in consumer detriment. I attach a response we received from npower to questions we raised and also subsequent correspondence received from including a further letter from npower. I understand that you have the other case notes from us on this matter.
The issues we would raise are:

1. It appears to us that during the period of 1st May 2007 and 31st October 2007, the changes effected by npower to the way in which they apportioned their first (higher price) tier of charges resulted in a detriment to the consumer. During a period of the year, when the consumer would have had applied a lower percentage of the core first tier units, they were suddenly subjected to a higher proportion of those units than would have otherwise been the case.

2. npower suggest that they were under no obligation to inform their 2.2 million customers affected of this as they had reduced their prices (of the second tier) at the same time. We would suggest that this is a spurious argument, burying detriment in amongst a price reduction. At worst it is a licence breach (SLC 23), and at best it is an underhand way of introducing a measure that is detrimental to consumers without them knowing.

3, the fact that the two changes to the first tier structure were applied in the same 12 month period, must result in consumer detriment. What happened in previous and subsequent years where a full 12 months elapses and the benefits and detriments even out, is not relevant.

4. we are concerned that the npower first tier of more expensive units does not relate to a period covering a year, ie 12 months, but covers the 'tariff year". They define the "tariff year" as being the period 12 months from any tariff change. Thus in 2007, they and 2 tariff years and with their price changes in early 2008, another tariff year has occurred. That represents 3 "years" in less than actual 12 months period. This has had the effect of resetting the higher tier unit clock 3 times and thus in a subtle way their customers are paying for the higher rate units far in excess of the supposed 4,572 units per annum.

5. npower state that they factored into their price reduction in April 2007 the effects of the tier changes. There is no transparency of this to consumers or to energywatch and we would request Ofgem to review the methodology used by npower to verify if this detriment has been offset by the level of their price reduction. As a matter of principle we find such an opaque reason to be unacceptable as whilst on the one hand the change on the tier structure is quite clear to the consumer, any 'positive" changes are notably hidden.


I would formally request Ofgem to investigate this matter and respond to the particular circumstances of this case, a possible licence breach by npower and the policy issues we have raised.