MSE News: Npower to pay £70m in refunds after billing blunder

edited 1 October 2010 at 1:48AM in Energy
174 replies 21.4K views


  • Well blow me down! Today I received a letter from npower which informs me that they have been discussing the changes (to charges made in 2007) with Consumer Focus and have “taken the decision to send you a one-off payment relating to your charges”. When I complained last year, supported and encouraged by DD, they sent me a “good will” payment of £100. Today’s letter refers to the fact that I have “previously been in touch with us about changes we made in 2007 to the way we charged for gas” and they have sent me an additional £62. This apparently includes VAT and a sum in lieu of interest!!! They will even pay any tax due direct to HMRC. How amazingly generous! :rotfl:
    I suppose I should feel grateful to kind old Uncle Npower … but somehow I can’t help feeling that I have still come off worst in this prolonged fight. :mad:
    Nevertheless, I will accept the extra payment and use it to pay for my heating this winter.
    I left npower twelve months ago and have been paying much lower bills since then.
    Finally, I would like to offer my sincere thanks to DD and all others who support people like me on this forum. You have done an excellent job and let’s hope the results of your efforts will be noticed by other companies that might be thinking of trying it on with the consumer! :T
  • SimpleDave wrote: »
    Online link is;

    (w) (sorry not allowed to post links)
    (h)ttps:// (previous page with a few details on)

    you need quite a few details:
    period of supply
    gas account number (if known)
    supply address etc

    i used this link and submitted a gas enquiry.

  • i have a large family, just recieved mine £12.75 wowee are these bills indipendently checked, i don't think so.
  • blueth wrote: »
    i have a large family, just recieved mine £12.75 wowee are these bills indipendently checked, i don't think so.

    Do you have your bills? Feb 07-April 08 ish would be good.
  • alleycat`alleycat` Forumite
    1.8K Posts
    Part of the Furniture 1,000 Posts Combo Breaker
    meggsy wrote: »
    Has anyone received their refund yet ?

    I received a goodwill payment in 2008 and they have now sent
    a refund of almost the same amount ;)

    Just got mine in the post (well a letter telling me to fill in something online).

    Ditto i got a gesture of goodwill (which was more) than what they are now offering me on top.

    All down to your hard work DD
  • alleycat` wrote: »
    Just got mine in the post (well a letter telling me to fill in something online).

    Ditto i got a gesture of goodwill (which was more) than what they are now offering me on top.

    All down to your hard work DD

    Thank you. I am pleased you have received a payment. However I am not convinced they are being calculated fairly.

    If we look at their explanation of how these payments will be calculated it is not clear to me how they are doing it.
    How did we calculate the payment amount?

    We’ve taken the maximum possible number of higher-priced units a customer could have been charged following the changes made in 2007. We’ve compared this with 4,572 units per year using 12 month periods around this time based on the anniversary of the date they first joined npower. The payment amount is based on any excess higher-priced units, multiplied by the difference between the rate for the higher and lower priced units applicable at the time. We’ve taken the additional step of including VAT and a sum in lieu of interest in this payment.

    The first sentence seems quite straightforward. We know that the period when the maximum possible number of higher priced units could have been charged is the twelve month period of 1st March, 2007 - 29th Feb, 2008. It was possible for a customer to be charged 6820kWh, some 2248kWh over the 4572 maximum. Also, using npowers own tables we know that for the period 1/3/07 - 29/2/08 the 4572 maximum was reached on 14/12/07. Therefore the excess units would be charged after this date. There was a price increase on 4/1/08 resulting in a large differential between the higher and lower priced units.

    The second sentence is much less clear. They are comparing 4572 with which 12 month period. The 12 months where the maximum overcharge occurred? The 12 months around the changes? There were two such changes , 1st May and 1st November, 2007. Or are they using the anniversary date the customer joins npower?

    The third sentence appears straightforward, but read on.

    I have recently seen the bills of a customer who has been compensated under this scheme.

    The customer was with npower for a period that straddled the periods of these changes and the period of highest charging, by a large margin

    I calculated the additional cost of overcharged units for the year 1/3/07 - 29/2/08. In this case npower had charged even more than the theoretical maximum of 6820 and the additional cost came to over £92.00 incl.VAT. Interest should also be added to this.

    The actual compensation received from npower was just over £60.00 incl. VAT and interest.

    Curious as to how this discrepancy was caused I made enquiries. They reveal that npower had calculated using the following method. To be fair I haven't seen their calculations but believe this is what they did.

    They took the customers starting date which was at the beginning of January.

    From that date they calculated on a daily basis (I have no idea how) the amount of units overcharged and applied the applicable price differential until presumably the end of December 07.

    They totalled the cost, added VAT and interest at, I believe, an interest rate of 6.6%. Bingo.

    It seems to me that they are out to save themselves a lot of money using this obscure method.

    By calculating the overcharge on a daily basis from the customers anniversary date they are in this example, using the lowest price differential between then and 30/4/07. At this point the 4572 had not been reached and there was therefore no overcharging to calculate.

    This will also reduce the no. of overcharged units available to be costed at the next highest price differential which was from 1/5/07 -3/1/08.

    Clearly they have not taken the period the maximum possible number of units this customer could have been charged. Neither are they using the appropriate price differentials.

    It would appear that if this is the way npower are approaching payment calculations then it is most unfair.

    Using their method a customer who joined on say 1st November, 2005 and remained with them until after February 2008 could have a maximum overcharge of 2248 which cost them over £90.00 but only receive payment for 1024 overcharged units. About £26.00 plus interest.

    I would suggest anyone who has their bills check the refund is correct.

    My view is that the precise amount npower overcharged each customer is exactly what they should be returning to each customer.
  • edited 21 October 2010 at 6:29PM
    Terrylw1Terrylw1 Forumite
    7K Posts
    edited 21 October 2010 at 6:29PM
    They will calculate the tier 1 after your 4th quarter (settlement quarter) which should be the 4th bill after your start date. This is when the blocks get restarted.

    Now, if your anniversary was inbetween when all this started, they need to perform a calculation on either side and refund each tier 1 overcharge. This would have to include all changes to prices/products that impacted the different between the tiers inside the total time the issue occurred.

    Then add VAT & interest. Thats what should be done.

    In terms of working out daily, thats impossible. What they mean is they pro rata everything by dividing affecting periods by the amount of days involved. So, thats just the same as when you work out your daily consumption between 2 reads.

    To work this out, they will say "you are allowed X units per day at tier 1 before tier 2 is used", which they work out by dividing your tier 1 threshold by the number of days in that year (or pro rata period if not a full year e.g. you were only with them 3 months). In this case, I would imagine they would use a monthly day value as opposed to elec where it would be a straight division of calendar days over a quarter.

    That statement is very unclear. They should say more about how they calculate it or it's just blah!
    :rotfl: It's better to live 1 year as a tiger than a lifetime as a worm...but then, whoever heard of a wormskin rug!!!:rotfl:
  • Using a customers anniversary date turns the whole thing into a lottery. For some their winning tickets will be dated 1st March, 2007 and some others will receive back what they overpaid. The rest lose out. Which means npower keep some (could be £m's) of overpayments.

    npower were perfectly capable of overcharging each and every victim a precise amount based upon the time of year and usage. They should be just as capable in reversing this calculation and making the correct payments back, plus interest.

    If asked they should supply a customer with a detailed breakdown of how they arrived at their figure.
  • Totally agree.

    This is a pretty standard bill recalculation really.

    It's no more difficult than anyone who has had a product change and then they find the whole set of bills around this need rebilling for instance, they had billed all estimates and the customer found their current reading to be lower than that used for the product change. That would require a pro rata recalculation on either side.

    The anniversary date is really just to say that the tier 1 must have ran out by then. Same on elec in that respect. It's only more complex with gas due to the finer changes over the seasons. However, it would be no different on elec if the customer had no mains gas.

    The statement they have published is clearly very misleading as it pretty much doesn't say anything...perhaps thats part of it's intention?
    :rotfl: It's better to live 1 year as a tiger than a lifetime as a worm...but then, whoever heard of a wormskin rug!!!:rotfl:
  • notbritishgasnotbritishgas Forumite
    2.3K Posts
    Part of the Furniture 1,000 Posts Combo Breaker
    Is this method of calculating the over charging too simple?
    In 2007 Npower suspended sculpting between I believe April and November? and introduced the flat 4572/365 method.
    Why not work out on a daily basis for that period the amount of high units charged on the flat method and then work out how many should have been charged under sculpting. The difference is the overcharge.
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