NPower gas 'sculpting'

backfoot

I am not sure how relevant it is, but I throw it into the melting pot just in case.

Some time ago Ofgem did an investigation into Doorstep Selling Malpractice. It wasn't the first such enquiry. I had represented my mother regarding a terrible such case (yes involving Npower). The situation was only made worse by Npower's subsequent complaint handling. Energywatch were involved as were the Energy Retail Association and their Code Manager for the relevant Code of Practice.

When I heard about the Ofgem investigation, I rang them and offerred the details and asked how I could participate. I was astonished to be told that individual customers could not make representations!!

Details would be collected from Energywatch only. My case was handled by Energywatch at the outset, but quite frankly they proved hopeless and I pursued the matter successfully to conclusion myself. Indeed I may not even have registered the matter with Energywatch.

I cannot for the life of me see how Ofgem can investigate a Customer based practice without the inclusion of the general public. It only undermines the confidence that we should expect from a Regulatory body.

I know that this is a wider issue than the sculpting complaints, but it does illustrate the way Ofgem fail to act efficiently or even logically regarding their statutory duties.

Sterling

backfoot wrote: »

I cannot for the life of me see how Ofgem can investigate a Customer based practice without the inclusion of the general public. It only undermines the confidence that we should expect from a Regulatory body.

You are absolutely 100% correct. For too long the people at Ofgem have sat in an ivory tower and refused to accept representations from individual customers, while forgetting that their collective duty is to serve and protect those very customers.

In the case of the Ofgem investigation into npower’s sculpting changes of 2007, Ofgem took everything npower told it at face value, without any proper scrutiny whatever, while at the same time refusing to arrange for any response or rebuttal by the public. That was a denial of natural justice which made a mockery of the outcome of Ofgem’s investigation.

W_s_n

Sterling wrote: »

Looks like a step in the right direction from Ofgem for a change (after a push from other quarters). Here is the link to the story.

http://business.timesonline.co.uk/tol/business/industry_sectors/utilities/article6788000.ece

Hi Sterling, this link does not work anymore.

W_s_n

Although the article is still there. Very strange.

Sterling

Stranger still, is the fact that I have just tried the link in my post #1306, and it’s working fine for me. Also I have just tried the same link as quoted in your post #1309, and again this seems to be working okay too.

I imagine the problem you encountered has been corrected.

meggsy

http://money.uk.msn.com/investing/news/article.aspx?cp-documentid=149161671

marky1125

Hi,

I rang nPower today to ask why my account had not received a refund due to the ofgem ruling. I was explained to me that the ofgem ruling only applied to customers that use less than 12,000kWh of gas per year, and that nPower had paid each of those 2,000 customers a £6 refund.

I use more than 12,000kWh and consequently I don't qualify for a refund.

Cheers,
Mark

Sterling

marky1125 wrote: »

I use more than 12,000kWh and consequently I don't qualify for a refund.

What has your annual gas consumption got to do with whether or not you “qualify” for a refund? Surely, if npower has billed you for more than the contractual maximum of 4572 units in any continuous period of 12 months then you have been overcharged, and are entitled to a full refund.

By the way, the Ofgem ruling does not restrict customers who use more than 12,000 kWh from claiming. It appears you have been misled by npower, as usual.

marky1125

Sterling wrote: »

What has your annual gas consumption got to do with whether or not you “qualify” for a refund?

Nothing. I agree. The lady I was speaking to was saying I didn't qualify for the ofgem ruling based on my usage level. She continues to deny that I was billed incorrectly, despite black is white evidence to the contrary. I have to say I have previously been paid a £50 'poor customer service' apology for my gas billing situation so although they've refused to acknowledge incorrect billing they have pretty much paid me back for the additional T1 units.

Sterling wrote: »

By the way, the Ofgem ruling does not restrict customers who use more than 12,000 kWh from claiming. It appears you have been misled by npower, as usual.

That's very interesting. I didn't argue that point because my knowledge of the ruling is not what it should be.

DirectDebacle

Here is the response from Ofgem I received to my complaint. Several matters I asked to be explained have beeen completely ignored and I will have to ask them again.

It appears that, 'Ofgem The Regulator and Protector of the Public' do not have any powers or ability to assist customers who have been overcharged £100 million or so. Fortunately this situation has only existed since 1986 and like a shot, Ofgem have jumped on this chink in their armour and are now seeking Govt. to put it right.

Make of it what you will.




Complaint about Ofgem’s investigation into Npower’s two tier tariffs

As the Managing Director responsible for the enforcement function, I am responding to your letter of 29 June 2009, complaining about the investigation Ofgem carried out following a referral by energywatch on 7 March 2008. I am also addressing the matters in your earlier e-mail on information about details of your case against Npower and other matters. I am sorry for the length of time it has taken to respond.
I want to emphasise that after the limitations in our powers became clear, Ofgem closed the investigation and did not make a decision on whether there had been a breach of Npower‟s licence. It is wrong therefore to conclude that Ofgem accepted Npower‟s use of a tariff year or accepted that Npower had notified customers correctly.

Context for the investigation

When a complaint is received, Ofgem considers whether to open an investigation in accordance with its published enforcement guidelines.Among the factors it takes into account is whether it has the power to take action and is best placed to act. In this case, Energywatch referred to a specific licence obligation on notification to customers of changes which involve an increase in charges or which significantly disadvantage customers. It also asked if there were other issues which might result in consumer detriment. Ofgem considered whether it had powers to take action using the powers in relation to consumer protection legislation under the Enterprise Act 2002. In both these contexts, during the course of our investigation Ofgem considered not only whether there was a potential breach, but also the potential outcome of using the different powers available to it. This context and the ability of Ofgem to take action constrained the investigation and influenced its progression and the extent to which different matters were explored. It was not a case, as you assert, of collusion between Ofgem and Npower.

The two aspects of the investigation and the tariff year

The action taken by Npower, including the restarting of a “tariff year”, was examined under the relevant licence condition and the consumer protection regulations.

Energywatch had referred to Standard Licence Condition 23, and Ofgem investigated under Standard Licence Condition 44(6) which Condition 23 replaced and which was in place at the time of the alleged contravention. This condition concerned the notification of customers where there was an increase in price or where there was a variation of any term to the significant disadvantage of the consumer. As you know, Ofgem asked a number of detailed questions of Npower in the context of this investigation to establish whether there had been a breach of the relevant licence condition. The requests for information in June and September were made using Ofgem‟s powers under section 38 of the Gas Act 1986. Npower‟s responses were discussed within Ofgem and were explored in meetings with the company. However, in the light of the statutory time restrictions in the Gas Act 1986 that meant that Ofgem would not be able to impose a financial penalty in this case, and other
factors such as the fact that Ofgem has no power to order a company to pay compensation, a decision was made to close the case on administrative priority grounds.
The consumer protection legislation referred to under the Enterprise Act 2002 deals with matters such as unfair contract terms, or misleading omissions. Ofgem‟s consumer protection powers are however aimed at stopping companies behaving in a particular way, or using particular contract terms, or failing to explain particular contract terms. Ofgem can only take action if the breach is continuing, and even then there is no ability for Ofgem to impose a financial penalty or to require the payment of compensation. It does not have the power to initiate criminal proceedings under the consumer protection regulations.

Ofgem did not accept Npower‟s use of the concept of a tariff year which could be restarted without informing customers. However, as the action taken by Npower was in the past and was not continuing, Ofgem did not have the power to take any action under the Enterprise Act 2002. In closing the case, it noted that Npower had compensated some of those
affected and that individual consumers would still be able to go to court or complain to the energy ombudsman.
The question of whether there was a breach of contract between Npower and individual consumers is a matter which can only be decided by the court. It is clear in the decision document on Ofgem‟s website that the decision in this case does not preclude action in individual cases.

Details of your case against Npower

You have asked why the investigation team sought details of your case against Npower, about the legal basis for this, about its use, and why you were not informed.

I understand that the investigation team had seen press coverage about your case and wanted further details of the case and Npower‟s response to understand whether the court reached any conclusions in the individual cases which would be of relevance to its investigation.
The Authority has a range of powers to seek information. In this case, under section 38 Gas Act 1986, the Authority may require any person to provide information to it in relation to the exercise of its functions. Use of the information is subject to a range of restrictions on further disclosure. The Authority is a data controller under the Data Protection Act 1998
and therefore has certain responsibilities concerning how personal data is used.

Evidence from third parties

It is indeed open to Ofgem to take evidence from any third parties in conducting an investigation. The extent to which it might invite evidence from third parties - whether they are from within the industry or from consumers or those representing them - depends on each case. In this investigation, Ofgem had information from Energywatch and individual consumers and details of other cases, including yours. It did not seek further information from third parties because the investigation team did not consider that this would aid an investigation where it became clear that Ofgem‟s powers were constrained.

Further allegations about Npower

In your letter, you say that Ofgem carried out the wrong investigation. Specifically you allege that following the lowering of Centrica‟s prices, Npower sought to compete by decreasing its prices while at the same taking other action such as deciding that a tariff year could be less than a calendar year.

As stated above, Ofgem did not accept the concept of restarting a tariff year. I understand that it did not examine in detail the events surrounding the February 2007 changes or the similar changes you allege occurred from 2003 onwards because in both cases Ofgem would have been “timed out” in its ability to impose a financial penalty. If Npower were to use the concept of restarting a tariff year again, that would be another matter, and it is likely that Ofgem would open an investigation.

Further action to give Ofgem greater powers

As is clear from the above, one problem for Ofgem in this particular case was the fact that we cannot impose a financial penalty where the breach took place more than a year ago (unless we have issued a notice to „stop the clock‟). In the light of this and other investigations, we raised this with Government and it has recently announced in its “UK
Low Carbon Transition Plan” paper that it intends to amend the primary legislation which restricts our ability to impose a financial penalty. The Government has also recognised in its Consumer white paper (A Better Deal for Consumers) that there may be a need to strengthen the enforcement powers behind consumer protection legislation. It is
considering a trial period where the Office of Fair Trading has the ability to impose penalties for breach of the legislation. It is unclear whether this power will be extended to Ofgem and other economic regulators.
More broadly, our energy probe last year highlighted the need for tougher obligations to be put on suppliers. We are now proposing changes to deliver these. Changes include strengthening the obligations on suppliers when they market tariffs to consumers, introducing new rules on direct debits, and the development of standards of conduct for suppliers. We considered restricting complex tariffs such as those used by Npower in the investigation you have complained about. We decided against this as we did not want to prevent the development of new tariffs linked to the introduction of smart metering and the growing emphasis on promoting energy efficiency. However, we are proposing a number of steps aimed at improving the transparency of tariffs and suppliers‟ billing which should go some way to addressing the issues of complexity.

While this response may not completely satisfy you, I hope it explains better the context for the investigation. In other circumstances, Ofgem‟s action may have been different. You may complain to Roy Field, Ofgem‟s Chief Operating Officer [EMAIL="roy.field@ofgem.gov.uk"])[/EMAIL] if you wish this decision to be reviewed. If you are not content with the outcome of the internal review, you have the right to refer the matter to the Parliamentary Ombudsman(http://www.ombudsman.org.uk) via your MP.