NPower gas 'sculpting'

Cardew

DD
The obvious question is why didn't any of ofgem's deliberations on the 'tariff year' appear in the information they released under the Freedom of Information Act.

In fact nothing of the 'investigation' appeared in the FOI information. Not a single letter to, or from, npower on the question of the 'tariff year'.

Ofgem claimed considerable credit for forcing npower to repay miniscule sums to a tiny fraction of disadvantaged customers, yet the vast majority of customers have not been compensated.

Whilst this quote may be correct:

It does not have the power to initiate criminal proceedings under the consumer protection regulations.

It certainly has the power(and duty IMO) to ask the appropriate authority to look at the case; such a recommendation would carry a huge amount of weight.


ofgems response is a disgrace!

This will run and run.

1carminestocky

Absolutely unbelievable response from Ofgem. I suggested a while ago that I believe there will have been some sort of Govt. intervention here and I genuinely believe there will have been. I note the potential scale of the pay back if this was investigated properly would dwarf npower's recently published annual profits figure. If that is the case, maybe OFGEM have been put in an impossible position here? This is not about justice for the public, IMO this is wholly about money and the fact that the Govt wouldn't want to lose/potentially destabilise one of the Big 6 just before an election. There are going to be a lot of ex ministers kicking their financial heels when the election results are announced...

Sterling

In agreeing with the above posts perhaps I may briefly mention here the following points, which I believe go to the very heart of this matter.

• During the investigation into the Energywatch complaint, the Ofgem investigation team could plainly see that npower appeared to have overcharged around 2.2 million customers.

• When they put this to npower, that company offered Ofgem two highly unorthodox defences, namely the “tariff year” and “compensation”.

• It is clear that the investigation team did not feel itself sufficiently legally qualified to adjudicate upon the legal validity of either defence, and therefore chose not to do so.

• However, in so choosing, the investigation team made a fundamental mistake which distorted its consideration as to whether npower’s changes to its billing methodology in 2007 caused consumer detriment. That is to say, since the team were not prepared to adjudicate upon the validity of npower’s said defences, the team could not say whether or not npower’s actions led to consumer detriment.

• Clearly, as the team had placed itself in a position where it could not say that there had been consumer detriment, the investigation in effect crumbled into a discussion of technical issues.

• As mentioned above, clearly the investigating team didn’t feel themselves sufficiently legally qualified to decide upon the validity of either of npower’s said two defences when they were presented to them, but instead of ducking the issue, surely the investigating team should have taken legal advice from specialist leading counsel, or even from (for example) the Attorney General.

• Had the team done this, they would have been in a position to properly carry out their regulatory investigation; and if the team had received distinguished legal advice confirming (as I firmly believe) that both of npower’s defences were spurious, then Ofgem would have been able to conclude that there had indeed been consumer detriment and would have been able to act accordingly in exercising what would then have been its much stronger powers against npower.

• As the team failed to take this obvious course of action, it was negligent at a fundamental level, and the said investigation should be set aside (and begun afresh) perhaps on the grounds that npower provided answers to the Ofgem investigating team that were deliberately or otherwise misleading.

In addition to the above numbered points, there is also the manner in which the investigation itself was conducted. That is to say, it was one-sided in the extreme; the public had no representation or opportunity whatever to rebut or refute the statements put forward to the investigation by npower, or to offer any statements or witness evidence to the contrary. That was a denial of natural justice to the consumer, and again renders the investigation (which was quasi judicial in nature) fundamentally flawed to the point of being legally null and void.

It has to be remembered that Ofgem is of course the regulatory authority (a position of considerable responsibility) and so it should have ensured that the manner of its investigation and its investigation team were fit for purpose. Sadly it appears that it failed on both counts.

Cardew

Sterling wrote: »

When they put this to npower, that company offered Ofgem two highly unorthodox defences, namely the “tariff year” and “compensation”.
.

Whilst I would obviously agree with your sentiments in the post above, I don't think the above statement is correct.

The 'tariff year' term was offered up as a defence to disgruntled customers and formed the basis of the compaint submitted to ofgem by Energywatch.

Having trawled through ofgem's release of papers, I am not aware of the subject of the 'tariff year' being discussed between ofgem and npower.

In fact reading ofgem's latest reply to DD, they still do not specifically state that the 'Tariff Year' was raised with npower.

Sterling

Cardew, I’m sure you would agree that if npower was offering the “tariff year” as a defence to its customers, then that alone should have obliged Ofgem (as the regulatory authority) to consider its validity, and whether npower was issuing misleading statements to the public.

The “tariff year” was mentioned in the original Energywatch complaint to Ofgem, and again that would surely have obliged Ofgem to consider it.

It was mentioned, seemingly as a matter of fact, in Ofgem’s statement to Consumer Focus, explaining why it closed the case, as follows:

“With effect from 1 May 2007, npower made a number of changes to its pricing structure. The first change was a revision of the seasonal pricing profile to facilitate system changes. The annual threshold was apportioned going forwards on a flat rate basis and at the same time npower started a new “tariff year”.”

The same document also confirms that npower did indeed offer the tariff year to Ofgem as a defence, and again I quote:

“It [npower] also stated that it had applied the concept of a “tariff year”.”

So despite the fact that you can’t find any specific discussion between Ofgem and npower, I think it nevertheless came within the scope of the investigation as one of npower’s purported defences, and it should have been adjudicated by Ofgem accordingly.

DirectDebacle

The shame of it is that even if Ofgems investigation had been as thorough as we all hoped, they still do not have the power to order energy companies to pay their customers compensation, which is what we want.

I have no doubt that complaints against Ofgem will reach Step 2 and again Ofgem will exonerate themselves. Then on to the Parliamentary Ombudsman. That may be useful in drawing to the attention of the law makers how little protection there is at the moment for consumers in cases such as these. I have the folorn hope that it may lead to a re-investigation into this matter by a properly equipped authority. I firmly believe that this is a prima facie case of obtaining property by deception and needs to be investigated as such.

I am given to understand that at the moment legal advice is being sought into mounting an action of collective redress (class action). This is not a simple matter of showing that npower charged customers more than 4572 units over a year. It is a much more convolouted approach than that and involves the collection of data surrounding the effects of the price change and if that caused detriment. It is not yet known if such an action would be likely to succeed or not as the data collection is not yet complete. However the possibility of gaining mass compensation for those affected is not yet dead.

In the meantime individuals can still press on with their breach of contract claims. I am sure npower will continue to keep paying out at the first sign of a court action on the horizon.

Cardew

DD,

IMO there are two important areas where ofgem have fallen short.

1. We can accept ofgem's position that they are powerless to fine companies or order compensation to be paid.

However their report made no mention of the central issue of the 'tariff year'. Had they simply stated that they found the use of that 'scam' ensured virtually every npower customer had overpaid and was unacceptable, then action by other bodies(OFT etc) would have inevitably followed.

However their report was a self-congratulatory whitewash.

2. Secondly, what is the point of the Freedom of Information Act when the information released under that act was page after page of meaningless bumph.

If, as they now claim, ofgem did consider the issue of the tariff year(and they imply that npower were asked questions about the subject) why is there no mention of this most important subject in the released information? Was introduction of the tariff year an acceptable practice or not?

Their deliberate concealing of information(assuming that they did indeed consider the tariff year) that should be released under the FOI has made a mockery of the Act.

DirectDebacle

I share your concerns and this point requires clarification by Ofgem.

Cardew wrote: »

1. We can accept ofgem's position that they are powerless to fine companies or order compensation to be paid.

However their report made no mention of the central issue of the 'tariff year'. Had they simply stated that they found the use of that 'scam' ensured virtually every npower customer had overpaid and was unacceptable, then action by other bodies(OFT etc) would have inevitably followed.

However their report was a self-congratulatory whitewash.

Ofgem are not powerless to fine companies. It is one of the few powers they possess and is mostly lightweight in terms of severity when they do impose fines.
They say that one of the main reasons they did not fully investigate is that the complaint was 'timed out' and thus they were unable to impose a financial penalty. I have asked them why this is the case. Ofgem received the Energywatch complaint on 7th March, 2008, which concerned npowers actions on 1st May, 2007. The statutory time limit is 12 months. Therefore Ofgem had almost 2 months to issue a notice to 'stop the clock'. I suspect their failiure to do this was due to nothing more than incompetence. In any event it meant what limited sanctions were available to Ofgem at the time they received the complaint were cancelled out by their inaction.

It seems that Ofgems approach to this investigation was based upon the legislation they choose or are required to enforce and the powers they have if any breaches are found. In view of the above it appears Ofgem felt there was now little point in doing any meaningful investigation for the reasons above and as set out in their letter of explanation.

They then spent the best part of a year having 'discussions' with npower. The legal team at npower would be safe in the knowledge that Ofgem could not impose a fine as Ofgem had failed to comply with the statutory requirements regarding time limits and they knew that Ofgem have no power to order companies to compensate consumers. npower would be more than happy to volunteer to pay the compensation that Ofgem suggested. It was nothing compared to what they had gained from their actions.

It would appear that Ofgem, in actual fact, did very little in terms of investigation, as their letter shows.


They never considered the big picture. They should have looked at the matter from 2003 when two tier pricing was introduced, the effect of the tariff year and changing from flat to weighted in 2004 when a similar overcharge occurred and then at the price change and other changes in May 2007. It would have become clear that there was probably a whole raft of legislation that npower were likely to be in breach of and that most of that legislation was not within Ofgems jurisdiction. It would then have been incumbent upon Ofgem to pass their finding on to the appropriate authorities. As Ofgem confined their investigion within the Enterpise Act and Gas Act and found they could do nothing under those Acts, they closed the investigation.

They may not have acted illegally but their actions, or lack of it, are quite appalling.

Their response to FOI requests leaves much to be desired as does their responses to almost every other request I have made to them.

It is quite possible that much of the information we would expect to see as a result of an investigation e.g. records of meetings with npower, notes of discussions on the 'tariff year' etc. simply does not exist. Ofgem have said that because of their approach to investigations that they closed this investigation on administative grounds. It became apparent to then from almost from the outset that they would have no power to either compensate consumers or fine npower. From their standpoint an investigation would therefore be fairly pointless. With such an attitude it is understandable that record keeping may well have been lax and that the investigation as such was not much more than a few coffee and biscuits meetings with npower.

Certainly the fact that around 2m customers could have been overcharged an average of £40-50 each didn't seem to be of much concern to them. As they say in their letter, why should they bother when customers can go to the civil court?

Sterling

Cardew wrote: »

Secondly, what is the point of the Freedom of Information Act when the information released under that act was page after page of meaningless bumph.

This is of course total nonsense. Just because the FOIA didn’t work for you on this occasion doesn’t mean to say that it is pointless. On the contrary, it is an invaluable aid in helping to bring public bodies to account. But like any tool it can have its limitations.

meggsy

meggsy wrote: »

IMO this is good news ... Anne Robinson to return to Watchdog, and the programme is extended to one hour :T

http://www.guardian.co.uk/media/2009/may/11/anne-robinson-returns-watchdog

What a complete and utter disappointment ! The whole format of this new consumer programme is a mess, not at all easy on the eye to view either, soft focus or whatever it is !

The second programme last night was no improvement either, (other than the removal of the 'filmic' effect) now so trivial there's no hope of them taking on npower or Ofgem :rolleyes:

http://www.bbc.co.uk/dna/mbpointsofview/F1951566?thread=6916519&skip=20&show=20