Npower was recently fined £2m by Ofcom for breaching the regulations that are set out to deal with customer complaints. The breach by Npower included them failing to record all the details required in relation to customer complaints as well as failing to give customers important details about the Energy Ombudsman’s redress service. This fine follows a similar one given to British Gas in July for a comparable breach of regulations and it has come to light that EDF energy is also being investigated.

It has transpired from Ofcom that there has been a huge rise in customer complaints with over 530,000 received this year. Statistics show this year (to the end of September 2011) that the most complaints were against British Gas who had 197,682 complaints (12.37 per 1,000), Scottish & Southern Energy with 106,444 complaints (12.1 per 1,000), EON with 60,798 complaints (12.16 per 1,000) and EDF Energy had 48,730 complaints (8.86 per 1,000).

It should be noted that a complaint is defined as a problem that hasn’t been dealt with or resolved by the end of the next working day from when it was made – and the reason for all these complaints? It appears to be along the common themes of being billed incorrectly, problems with getting through to the call centre and poor treatment received by the staff at the energy company.

It is no surprise then that consumers are becoming increasingly disillusioned with energy companies as it appears that they aren’t dealing with complaints satisfactory as well as having increased their energy prices. These increased prices during this economic recession means many households face a tough winter and a difficulty paying fuel bills which will plunge many households into fuel poverty.

It is therefore an ideal time for an energy company to start convincing consumers that they understand their plight, needs and complaints. Energy companies currently have a bad reputation and they need to start showing consumers that they can be trusted. It isn’t much for consumers to ask that energy companies comply with all regulations and standards, and look to their needs.

Interestingly, the industry regulator has suggested that new operators should be brought into the sector to help reduce ‘structural inadequacies’. Currently the smaller, lesser known energy companies are performing well and shaming the larger energy companies. Companies such as Ecotricity who had just 0.55 complaints per 1,000 are leading the way. So with a shake-up and additional competitors in the energy sector will this help ensure consumer welfare for all?

Guest Article by Sarah Wain

The Big 6 have been in the news a lot lately and not entirely for the right reasons. We hear so much about them, but the information usually only goes as far as price rises.

So who are these energy behemoths that fuel our gas boilers and heat our showers in the morning?
After privatisation on March 31st 1990 the energy industry changed dramatically. As a result 6 companies have emerged as key players in the UK energy market.

Npower
Npower supplies gas and electricity to around 7 million customers in the UK and employs over 11,000 staff. It predominantly produces energy using gas-fired, coal and oil powered stations with a small proportion being generated via renewable energy.
During the 1990s it acquired several smaller companies such as Midlands Electricity, Calortex, and Independent Energy and eventually became Npower in 2000.
They are currently a member of the ‘Percent Club’ which requires them to invest more than 1% of their pre-tax profits back into the community.

British Gas
British gas (including Scottish Gas & Welsh Gas) is the largest energy supplier in the UK and delivers gas and electricity to over 16 million domestic and commercial users. The company also operates in the U.S and Canada with recorded revenues of over $22 billion in 2010.
It currently operates 8 gas-fired power stations but also produces energy via various methods including the largest offshore wind farm in Europe. The giant wind farm covers an area of 20 square km and has 54 turbines.

EDF Energy
EDF energy was founded in 2002 and is owned by French state operated EDF SA. EDF stands for Électricité de France. The UK arm employs over 15,000 people and supplies gas and electricity to almost 6 million homes and businesses.
EDF has made a number of acquisitions including London Electricity, SEEBoard and British Energy. They continue to be a big supporter of green initiatives with EDF operating over 20 wind farms in the UK.

E.ON
E.ON supplies gas and electricity to over 9 million homes in the UK. They operate over 20 windfarms, but also utilise hydropower schemes in England and Wales.
It is currently part of the largest investor owned energy service company in the world delivering gas and electricity to over 26 million customers, their headquarters are based in Germany. The group reported revenues exceeding $92 billion in 2010.
E.ON used to be known as Powergen but was taken over in 2002 and renamed.

Scottish Power
Scottish Power was founded in 1990, employs 24,000 staff and supplies gas and electricity to over 5 million customers in the UK. It is also a subsidiary of Spanish utility company Iberdrola.
It is currently in partnership with Sainsbury’s. So if you buy your energy through Sainsbury’s you are in fact using Scottish Power.
Iberdola bought the company in 2007 for £11.6 billion and effectively incorporated it into its structure making it the third largest energy supplier in Europe.

SSE
SSE supplies 10 million customers with gas and electricity in the UK. They were the first company to be awarded the UK Domestic Electricity and Gas Supplier in Customer Satisfaction prize. They were also responsible for building the first deep water wind turbine in the UK.
SSE have also invested over £850 million in renewable generation, refurbishment and various other construction projects.

Guest Article by Louise Goldstein

nPower gas customers are due for a refund of around £35 each.

It’s reckoned that some two million homes are due for the largesse after they had been overcharged for gas in the first place. The nPower gas refund is thought to be costing the company around £70 million in what is the biggest energy compensation package of its kind.

The over-charging dates back to 2007 and concerns the way it charged customers for their gas. Much of the problems relate to how the energy giant communicated with their customers.

nPower gas refunds will start to reach customers in the next two months.

The problems dates back to around three years ago when nPower began a scheme whereby it charged its customers for a fixed monthly number of gas units. These were called primary block units and were initially more expensive that the previously primary units which varied depending on the time of year.

The nPower is then said to have lowered their prices and started to introduce discounts, but, some customers who didn’t use much gas, found themselves still being billed for the standard number of primary units, which of course meant they were paying for gas they weren’t using.

This began to cause confusion, initially denied by nPower, which countered by saying that most of its customers were benefitting from cheaper gas. But an investigation by the industry’s regulator, Ofgem, caused nPower to stump on average a £6 refund for around 200,000 customers.

A nPower spokesperson said:
“Although the vast majority of our customers benefited from the combined effect of the changes, some, who were low users of gas, did not.”

But a number of consumer watchdogs did not agree and nPower was ‘forced’ into conducting a thorough investigation, and then agreed to make refunds worth between £1 and £100 (on average £35) to nearer two million customers (whether existing, or former).

A statement from nPower said:
“Although the vast majority of our customers benefited from the combined effect of the changes, some, who were low users of gas, did not. We are sorry that the complexity of the changes we made caused confusion. We are now doing all we can to improve our communication with customers.”

All customers should receive notification of a refund, if they are eligible, by the end of November. Any refund will be in the form of a letter that can be cashed at a Post Office.

Mike O’Connor, who heads up Consumer Focus, said:
“Consumer Focus has worked closely with Npower to ensure that refunds are made fairly and that no customer loses out. A huge amount of work and collaboration has resulted in the right thing being done by Npower for its customers and we welcome this. It has been an great example of how consumer organisations can work with industry to deliver a fair deal for consumers.”

There are a number of nPower gas customers not eligible for the refund, including those that buy electricity, gas pre-payment meter customers, 2009 Price Fix tariff customers, Gas Guardian tariff customers, Tracker tariff customers, Sign Online v8 tariff customers and 1st steps customers; and, business customers. Also those with a debt greater than the compensation due are not eligible.

Guest Article by Neil Camp 

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

Act now says nPower, otherwise risk facing penalties of a financial and reputational nature.

The stark warning from the energy giant comes because it believes that many companies and public sector organisations are just not ready for the Carbon Reduction Commitment Energy Efficiency Scheme deadlines.

nPower has issued its advice after the Environment Agency confirmed that of those companies and organisations which will included in full in the scheme, less than 10% have bothered to register. By 21 June, only 447 out of a total of 5,000 of those companies expected to participate in the Carbon Reduction Commitment Energy Efficiency Scheme had signed up.

And if they don’t register by the first deadline of 31 July, 2010, one of the big advantages they’ll miss out on is being able to register dissimilar businesses within the same group. This is a concession that nowadays many industrial conglomerates are made up of very different subsidiaries in varying business sectors and that they should be treated as individual entities. This is known as the disaggregation option.

Head of business energy services at nPower, Dave Lewis, said:
“The disaggregation option might seem like a simple administrative task, but it could potentially be a valuable route for many businesses. CRC participation is typically established at a group level, but being able to register companies separately could make collating data and submitting ongoing evidence packs simpler.

“There’s also the reputational benefits to consider. If the parent company’s name is little known publicly, for example, it could miss out on the brand value of a high position in the Carbon Reduction Commitment league table.

“Bearing in mind the registrations that have been completed to date, we expect many to miss out on disaggregation, and instead be faced with managing Carbon Reduction Commitment at a group level. This will bring its own challenges as data will need to be compiled and submitted for the whole group.

“The slow rate of registration so far also indicates that many organisations may not be actively tracking their energy use from 1st April this year in preparation for the year end footprint report. The longer organisations take to track this, the more challenging the task will become.”

And the penalties for not signing up to the scheme are quite severe. For those companies and organisations who miss the final deadline of 30 September, 2010, a fine of £5,000 will be levied. And a further £500 will be charged every working day past the 30 September deadline, subject to a maximum 80 days.

Guest Article by Neil Camp