Energy industry regulator Ofgem has announced that it has launched “misselling” investigations into four of the UK’s largest energy suppliers. The four named are nPower, Scottish power, Scottish and Southern Energy, and EDF Energy.

The investigation concerns whether the four energy suppliers are complying with new regulations after a recent Ofgem probe.

What’s more, Ofgem has established a “Hotline” with Consumer Direct, so that any customers with examples, or evidence of misselling can tell their woes. The number to reach this service is 08454 04 05 06. Customers are being urged to call if they are at all concerned about the sales tactics of the four energy companies when negotiating energy contracts. This might include face-to-face dealings, or by telephone.

Ofgem is keen to review any evidence of misselling.

The regulator is throwing its weight around after its recent retail market probe and tougher obligations placed on energy suppliers.

The Ofgem Senior Partner, Markets, Andrew Wright, said:
“Suppliers have existing obligations to detect and prevent misselling and new licence conditions were brought in following our probe to further increase protection for customers. We expect all suppliers to comply with these tougher obligations but if our investigations find otherwise we will take strong action.”

It was last October when the new Ofgem obligations were introduced. It meant that the energy suppliers had to be more proactive in the prevention of misselling to customers face-to-face and over the telephone. Key were the conditions that if the companies were selling face-to-face, then they are obliged to provide their customers with an estimate before any agreements, or contracts are signed. Furthermore, most customers should get a comparison of the supplier’s offer with their current deal.

Ofgem acknowledged at the time that these newer obligations were tougher than those used within the general consumer protection law, but argued that the importance of the issues raised in energy deals were such that it warranted tough sanctions.

Both Ofgem and Consumer Focus have also published a leaflet with has been designed to give consumers helpful advice and guidance when it comes to dealing with energy suppliers.

Ofgem goes on to say that just because they have launched the investigations, does not mean to say that all, or any one of the four energy suppliers involved has either broken a condition of the new rules, or has broken the law.

The regulator has had to fine companies before following similar investigations. In 2008 nPower was stung for £1.8 million and £2 million was levied on London Electricity (which is now part of EDF Energy) in 2002.

Should Ofgem get upset with one of the companies supplying the UK market, it has the power to levy a financial penalty of up to 10% of the company’s total turnover.

Such a fine would make a sizeable dent in any one of the four energy suppliers named by Ofgem in this latest investigation.

Guest Article by Neil Camp

Cheap electricity prices might be harder to get in the future thanks to a new Government green tax.

And ironically, the fact that cheap electricity prices might be a thing of the past, will mean a windfall for French energy company EDF.

It’s all thanks to the government’s plans to artificially raise the price of carbon allowances traded in the UK which will in effect make it more expensive to run a conventional fossil-fuel, high carbon power station, than it costs to run a low carbon nuclear plant.

And this, says two accountancy groups in major reports, will lead to an increase in electricity prices.

They point out that a carbon price of £29 per tonne, would result in a £7 increase per megawatt hour. This would take the total taxpayer cost to some £2.5 billion.

Translated in terms of the UK’s 22 million households , a £29 per tonne carbon price means an extra £40 every year on their energy bills.

And for UK businesses, it would mean a substantial addition to their costs.

As to the winner in this new arrangement, it’s been calculated that both EDF and the Treasury will be the main beneficiaries. EDF stands to get a windfall of £350 million, mainly because it owns and operates a number of UK nuclear power stations which currently produce nearly 15% of the country’s electricity. So the company gets the benefit of higher electricity prices, but will not have to buy carbon allowances, because their nuclear power stations do not produce carbon gases.

The same ‘carbon dividend’ will be felt by other renewable generation plants, including wind farms.

Observers says that EDF is keen on an increased carbon floor price for obvious reasons, as it’s a winner in both ways.

But experts point out that even with increased carbon floor prices, the incentive for new players to enter the market and build new nuclear power plants is simply not enough. And unless a major new nuclear power station build programme is started, then the current plants, plus the aging fossil-fuel stations, will not be enough to provide sustained energy for the UK over the coming decades.

Guest Article by Neil Camp

EDF, a electricity company which is a major UK energy provider, has announced that its about to boost facilities in Crawley and surrounding areas.

It intends to improve the local electricity network by investing some £4 million in West Sussex, including the increased capacity of its 132,000 volt grid which feeds the area. The project will involve the laying of new high-voltage cables which will be installed underground, plus increased capacity for the circuits which leave Bolney substation and head north.

One of the main incentives for this major refurbishment project is that the old cables in effect limit the amount of power that can be supplied to the more remote parts of the region. And the new underground cables will be able to cope with the expected capacity required over the coming decades.

An electricity company like EDF regularly has to upgrade their existing networks and even though the country is currently experiencing a number of financial cut-backs across all sectors, major infra-structure work, which has to be planned often years in advance, is still needed.

EDF Energy Networks Director of Capital Programme, Barry Hatton, commented:
“This essential project represents a major investment in maintaining and improving the energy infrastructure in the area for the foreseeable future.

“EDF Energy Networks is determined to provide a reliable supply of electricity and this project is part of our commitment. We hope people will understand the need for this work to be undertaken and would like to assure them it will be carried out with the utmost consideration for the community.”

The energy provider is reassuring local residents that the works to improve the network will take place with a minimum of inconvenience to their lives, saying it will do its best to reduce the impact on homes, businesses, motorists and pedestrians.

EDF is a major electricity company which produces one fifth of the UK’s electricity from a number of sources, including coal, gas and nuclear power stations, plus wind farms and combined heat and power plants.

Guest Article by Neil Camp

British Gas owner Centrica has been reported to be buying a stake in British Energy, the U.K. nuclear power, for some £2.3 billion.

This represents 20% of British Energy, which is owned by French company EDF, but is less than the 25% (for £3.1 billion) than was first reported.

Talks are said to have stalled after the world recession forced down electricity prices. And the deal which saw EDF snap up British Energy for £12.5 billion was only itself concluded in January 2009.

EDF and Centrica have ambitious plans to grow the business which currently operates eight nuclear power stations throughout the U.K. At the heart of the expansion is a plan to build four new nuclear power stations on the existing sites. This will be necessary in order to meet the government’s plan to generate more power from nuclear than fossil fuels.

The current eight British Energy nuclear sites are at Dungeness B, Hartlepool, Heysham 1, Heysham 2, Hinkley Point B, Hunterston B, Sizewell B and Torness. Together they generate around 15% of the U.K.’s domestic energy.

The four new plants are expected at Hinkley Point in Somerset and Sizewell in Suffolk. Depending on regulatory permissions, the first new plant is meant to be operational by 2017.

EDF is currently the world’s biggest operator of nuclear power stations. It’s acquisition of British Energy was at the time criticised by MPs and action groups. EDF is 85% owned by the French government and many were concerned that the U.K. was unnecessarily passing on control of one of the country’s main assets, and threatening energy supply security.

Guest Article by Neil Camp

• 4 million customers have no access to best offers
• Prepayment meters cost £118 more than direct debit
  
• Quarterly cash or cheque payments cost £80 more than direct debit

Announcing the findings of a seven-month investigation into Britain’s energy market, the energy industry regulator, Ofgem, has found no evidence of a ‘cartel’ amongst the big six suppliers, but it warns gas and electricity suppliers to stop charging customers different prices for paying by direct debit or pre-payment meters.

The report highlighted 4 million households that were £55 a year worse off because they couldn’t take advantage of the most competitive offers; households using pre-payment meters being charged an average of £118 more than direct debit customers; and households paying quarterly by cash or cheque being charged an average of £80 more than those who used direct debit.

According to Ofgem, although it found that the market works well for most consumers, many of the most vulnerable customers, including pensioners and low income households, were less likely to be able to make informed choices about tariffs under the current system. Customers not connected to the mains gas grid were losing out too.

The regulator proposes wide-ranging reforms which include a requirement for companies to help all consumers access the best deals and more transparency to show the link between the wholesale price of energy and the price charged to customers. It also wants to stimulate new competition by making it easier and more attractive for smaller suppliers to break into the market, currently dominated by six companies – British Gas, ScottishPower, Scottish & Southern Energy, EDF Energy, Eon and Npower.

Consumers have already been hit by two hefty price hikes this year and energy suppliers continue to blame soaring prices in the global wholesale gas and electricity markets. The recent Which? report on energy suppliers also reveals widespread dissatisfaction amongst customers, the lowest of all industries.

The Ofgem report is therefore likely to receive a luke-warm reception as many will feel disappointed that it doesn’t go far enough to impose its recommendations.

Mini-Post by Alan Potts