NPower gas 'sculpting'

alleycat`

cynical much DD?

I suspect the first letter will be a thanks for your letter.
Have to give it a couple of weeks before they can send out the second letter from that phone call...

meggsy

Found this on Utility Week ....

Ofgem justifies its decision not to take regulatory action over two-tier gas tariffs

http://www.utilityweek.co.uk/news/uk/gas/ofgem-justifies-its-decision-n.php

short version

meggsy

Become a fan of npower, by invitation only :eek:

http://www.marketingweek.co.uk/cgi-bin/item.cgi?id=65246&u=pg_dtl_art_news&m=241

DirectDebacle

"It is about customers receiving more than just bills but receiving an offer that puts a smile on their faces," he says.

Yeah, like offering to pay back what has been overcharged on your bills.

Precious_Thing

I've just switched to Npower as they came out as cheapest for me on comparison sites. Having read all this I'm wondering if I should just leave again as soon as I can.

What does anyone think?

Thanks,

Precious Thing.

DirectDebacle

Precious_Thing wrote: »

I've just switched to Npower as they came out as cheapest for me on comparison sites. Having read all this I'm wondering if I should just leave again as soon as I can.

What does anyone think?

Thanks,

Precious Thing.

Keep a close check on your bills to establish if they really are cheaper.

This thread is about overcharging which occurred up to April 2008 and will not be affecting your new account.

1carminestocky

Precious Thing, I'm assuming you are signed up to SOL15? If so, I hope you carefully read the T&Cs that are somewhat 'unique' to npower, specifically this one:

Direct Debit discount of £21 per year for gas and £21 for electricity. Dual fuel discount of £63 per year. Total discount of £105 per year.

The savings quoted include any discounts associated with this tariff. The discounts will be paid to you annually in arrears from your final bill of each 12-month period. To qualify, you must take your supply from npower and pay by the same payment method for a full 12 month period – this period does not have to be a Jan-Dec calendar year. Customers signing up to this tariff will receive paperless billing.

Of course, the 'savings' shown on the switching sites include this £105 discount, even though if you leave within 12 months (or, God forbid, miss a monthly payment for any reason) you won't get so much as a glimpse of it.

Sterling

meggsy wrote: »

Become a fan of npower, by invitation only :eek:

http://www.marketingweek.co.uk/cgi-b...art_news&m=241

It amazes me that it has taken npower all these years to realise the obvious fact that it is not much good for a business to keep recruiting new customers if it keeps losing existing ones at roughly the same rate.

Each new npower customer costs perhaps £60 - £100 to replace, in commissions and advertising etc. So every customer lost is a significant waste.

At last npower have expressed a realisation that it should try harder to keep the customers it has. If customers are fully satisfied, new customers will follow. That is how well run businesses grow. There is no finer salesman than a satisfied customer.

Do I think npower have turned over a new leaf? Well recognising that it has a problem with customer loyalty is a start. But that is like an alcoholic recognising and announcing that he has a drink problem is only the start. There’s a long way to go yet.

Even as I write this, customers are still being fobbed off with ‘spurious’ excuses from npower when they complain about having been billed for too many high tier
units etc.

Also I also don’t care much for the large discounts that npower offers. These can turn out to be a penalty (in effect) in certain circumstances.

Sure, the yearly cost looks good at the time you join (especially with a discount), but if the prices later change, you suddenly realise that if you switch either of your gas or electricity to another (now cheaper) supplier - as Carmine said earlier bang goes your discount.

In other words, you can end up having to stay with npower just for the sake of your discount. I personally gave up on duel fuel early last year in favour of getting the cheapest gas and electricity from different suppliers. At first this didn’t look the cheapest option; but it has given me maximum flexibility at very little difference in cost, and has worked out to be just as cheap in the long run; and I am sticking with it.

Large discounts to me do not promote customer loyalty. Much better would be for npower to focus on keeping its prices as low as possible; and stop forever bringing out so many new and unnecessary tariffs. All customers want is good prices, good service and not being mucked about by underhand tariff changes and the like. Customers want an energy supplier they can trust and depend upon.

Sterling

DirectDebacle wrote: »

Sterling your calculations for the amount npower may have profited through the sculpting scam are interesting and save to say that they may be a tad high, I would not argue with your result.

However that is only part of what you need to incorporate in Ready Reckoner Mk 2.

We know there was a similar sculpt 2004/5 and this was a flat rate to weighted change as opposed to the May 2007 change (weighted to flat). The original sculpt was repeated Nov 2007, flat to weighted.

Who knows how many customers were affected in 2004/2005. It is something that npower have kept decidedly quiet about

It might also be useful to know how much money was involved on that occasion.

Actually – I think I can provide a fairly good estimate for what the 2004 npower ‘sculpting’ change cost affected customers in total. I make it somewhere around £21.75 million including VAT; about a fifth of the 2007 changes.

The way I worked out this figure stems from the method I used in post #1164, which concerned my estimate for the total cost of the two ‘sculpting’ changes in 2007. The answer I got there was on the high side, at £143.67 million (incl VAT) as compared with the estimates by the press at £100 – 110 million. But I realised that if I could refine my answer such that it more closely resembled the estimates by the press, I could safely use the same method on the single ‘sculpting’ change in October 2004.

In my calculations for 2007 I used a very rough and ready estimate of the average price difference between the high and low tier units of 4 pence. When I looked again at this figure I realised I could get a much more accurate figure for this, with a little extra effort (as explained below). The revised average figure turned out to be lower at 3.012 pence; and using this in place of the original, the answer I got was £108.2 million including VAT – nicely within the press estimates.

All I had to do then was to prepare a new set of ready reckoners as regards the change on 1st October 2004, in similar form to my previous Tables A & B for 2007. For continuity I named them Tables A* and B* (see below). After that, I merely had to follow the procedure as for 2007, as in post #1164.

The only two things I didn’t have was

· a figure for the number of customers affected by the change in 2004 – so I used the same figure of 2.2 million customers, which is probably not too far off the mark

· a calculated figure for the average price difference between high and low tier units. I don’t have any gas prices for the period in question; but I think a figure of 2 pence won’t be too inaccurate for the time being (as its only in later years that npower has gradually cranked it up as high as 4 pence or more) – so I used 2 pence for now, and arrived at £21.75 million including VAT.

It seems clear to me that npower felt that if it could get away with that hidden profit in 2004 (less the VAT), that it could pull the same stunt (only much bigger) in 2007. And unless Ofgem can be made to reconsider its decision, npower has got away with it again.

For completeness, here are my tables A* & B*. They are used for the 2004 scam in just the same way as tables A & B were for 2007 (see my posts #1006 & 1048; and DD’s excellent thread on making a claim; accessed via the link contained in his signature).

…………………………………………….TABLE A*
……………….…………2003……………………….2004……………….…….,,,,2005
……………..…..Month……..Day…….....Month………Day…………Month……..Day
January………..n/a…………n/a………….381………….12.29………..631………..20.35
February……….n/a…………n/a………….381……….…13.14………..622………..22.21
March……………n/a…………n/a…………..381…………12.29………..558…………18.00
April………………381………12.70………..381…………12.70…….….448…………14.93
May……………….381………12.29…………381…………12.29…………325………..10.48
June……………..381………12.70…………381…………12.70………….192………….6.40
July……………….381………12.29…………381………….12.29…………110…………3.55
August………….381……….12.29…………381………….12.29……….110………….3.55
September……381……….12.70…………381…………12.70…………192………...6.40
October………..381………12.29…………334………….10.77…………334……….10.77
November…….381……..12.70…………471………….15.70…………471………..15.70
December…….381………12.29…………581………….18.74………..581………..18.74

……………………………………TABLE B*
……………….…………2003……………………2004
……………..…..Month……..Day…….....Month………Day
January………..n/a…………n/a……………242……….8.06
February……….n/a…………n/a…………..492……….8.31
March…………..n/a………….n/a……………733……….5.71
April………………n/a…………n/a…………….910………2.20
May……………….n/a………..n/a …………..976………-1.81
June………………n/a………..n/a ……………920….….-6.27
July……………….n/a………. n/a ……………732……..-8.77
August………….n/a…………n/a ……………460.…….-8.74
September…..n/a………….n/a …………..189…….-6.30
October…………….0………-1.52……………….0……….0
November…… -47……….3.00…………………0..…….0
December……..43……….6.42…………………0.………0

As for how I got a more accurate average price difference for my 2007 estimate, mentioned earlier – for each of the seventeen months concerned, I took the price difference in operation nine months later (because the excess units (over 4572) in each year of twelve months occurred after (say) nine months on average) and then I multiplied that price difference by the respective monthly figure in Table B.

For example for June 2006, I took the price difference from my bills nine months later i.e. for March 2007 (1.92 pence) and multiplied it by the number of excess units for a year beginning on 1st June 2006 – from the corresponding month column in Table B (=56) to give 107.52 pence.

Then I repeated that process for each of the seventeen months concerned and arrived at a total of 56,198.73 pence. I then divided this by the total of the excess units in the month columns of Table B (18,658) to give my refined average difference of 3.012 pence mentioned above. Putting 3.012 into the calculations in place of my original 4 pence gave a much more credible answer of £108.2 million including VAT as mentioned above.

This is still not the entire picture as painted by DD in terms of what could and should be claimed back by customers in total. But I hope it shows that Ofgem (as the official regulator, and supposed guardian of the energy consumer) was fast asleep in 2004, and failed to take any action at all. It is certainly not too late for action to be taken now, surely.

In normal civil actions, I believe the time limit is six years; although I’m not exactly sure when you should start the clock in this case. I suspect the lack of any or sufficient notice by npower means that time does not perhaps begin to run from 1st October 2004, but as from when customers could reasonably be said to have been aware that they had been overcharged. My suspicion is that it might be as late as summer 2008.

Edit – for some reason each of the three numbers on the bottom RHS of Table A has an unwanted space after the first digit, which for some reason I can’t correct.

DirectDebacle

Sterling wrote: »

.

This is still not the entire picture as painted by DD in terms of what could and should be claimed back by customers in total. But I hope it shows that Ofgem (as the official regulator, and supposed guardian of the energy consumer) was fast asleep in 2004, and failed to take any action at all. It is certainly not too late for action to be taken now, surely.

In normal civil actions, I believe the time limit is six years; although I’m not exactly sure when you should start the clock in this case. I suspect the lack of any or sufficient notice by npower means that time does not perhaps begin to run from 1st October 2004, but as from when customers could reasonably be said to have been aware that they had been overcharged. My suspicion is that it might be as late as summer 2008.

Good post. For those wishing for a bit more accuracy on the prevailing prices in 2004, it will come as no surprise that on 1st Oct, 2004 there was a price increase at the same time as the increased and unannounced 'sculpt'. The standard tariff was increased to 2.98p/1.55p (high/low) from 2.65p/1.38p.

This is where Ofgem singularly failed to grasp the nettle. They conspicuously neglected to investigate the effect of the 2007 'sculpt', over a 12 month year. They were aware of the 2004 'sculpt' but ignored to factor that into their enquiry and they requested court papers which would have shown not only the effect of the 2004/2007 'sculpt' but that also npower were being sued for a claim of breach of contract since 1/4/2003.

Ofgem have a statutory duty to protect consumers. They have already stated that in their opinion they were out of (statutory) time to seek compensation for consumers.

I would like to know where Ofgem has the authority to cherry pick which bits of legislation it is supposed to be upholding. Perhaps npower told them it was 'industry practice'. Ofgem believed it was industry practice to 'sculpt', because npower said so.