Posts Tagged ‘energy’
Two years ago, Britain’s small energy providers had 2.6% of the market. Since then, the Big Six have been acting like thundering arseholes, and as such, the smaller companies have been making gains and now have 13.4% of the market.
The little independents have been getting loads of new customers in the year to July 2015, while the Big Six managed to lose 660,000 accounts in the same period. The large companies have been offering dismal customer service, and the Competition and Markets Authority recently said that Big Six had overcharged customers by roughly £1.2 billion a year.
“Eventually customers who are on standard tariffs realise that they’re kind of getting ripped off and they look to the market and we’re out there with a great price, with a different message,” said Ed Kamm, chief customer officer at First Utility. Kamm’s company have doubled their customer base in three of the last four years.
He added: “We won’t be satisfied until many more people are switching and saving. We believe the key to this is a fairer, more transparent energy market to ensure consumers are getting the best deal and money can be put back in people’s pockets.”
Npower said that they’ve lost around 100,000 household customers between late 2014 and mid-2015, and everyone else is losing theirs too.
Which!!! honcho Richard Lloyd said: “The Big Six have repeatedly failed to deliver a decent standard of service so it’s no wonder customers are starting to leave them in droves. Despite this the CMA has found there is a lack of competition which is leading to people paying much more than they should.”
“We now need the competition inquiry to bring forward radical changes to boost competition, introduce fairer prices and encourage more households to switch to better deals.”
There’s a lot of hate and a lot of explaining to do, so this isn’t much of a surprise really.
The regulator’s new deadline has been moved from 25th December to 25th June, which means investigators can have a Christmas dinners, but they will be releasing their provisional proposals in January.
The CMA also have to look into the problems with the private healthcare market, as well as reviewing BT’s takeover of EE. They’ve got a lot of work to do, clearly.
The regulator recently said that the British public had paid around £1.2bn a year too much for domestic energy from the big six providers. This is a claim that the Big Six deny, obviously. There’s talk of a temporary price-cap while this all gets sorted, but nothing concrete has been said about that yet.
Roger Witcomb, chairman of the investigation, said: “As the most comprehensive investigation into the energy market since privatisation, this is a once in a generation opportunity to shape the future of this market for the better. It’s important that we get it right.”
“This is a huge programme of work and we have concluded that we could not complete it by the original statutory deadline. We have therefore decided there are special reasons for extending the reference period which will allow us some extra time to finish the job.”
We all know that energy companies have been taking the Michael for years, a view confirmed by the CMA in a report earlier this year. However, there are now calls to take thing a little further, and to force the energy companies to have a more reasonable default tariff to protect the vunerable and the ‘sticky’ (non-switchers).
Shadow energy secretary Caroline Flint is now calling on the government to introduce a protected energy tariff for vulnerable customers as a more robust response to investigations of overcharging in the energy industry.The tariff would be set by the regulator and target those least likely to switch tariff.
Earlier this year that the independent Competition and Markets Authority (CMA) concluded that households were being overcharged by £1bn a year, but the only action the government had taken was to write a letter the big six energy companies, a letter mostly shrouded in freedom of information exemption secrecy.
The CMA claimed the big six had been making more than £1bn a year by overcharging 70% of customers who are on the standard variable tariff, suggesting in July that a transitional regulated safeguard tariff could protect consumers while the energy market is fixed.
The groups least likely to switch are also the most vulnerable and include those on low incomes, who have low qualifications, who are living in rented accommodation, and those who are above 65. CMA research showed 35% of those whose household incomes were above £36,000 had switched supplier in the last three years, compared with 20% of those whose household incomes were below £18,000.
Flint’s proposals suggest a protected tariff model where each supplier must offer one tariff where the price is set by the regulator and any prices changes must be approved by them. This becomes the default tariff for vulnerable consumers, or consumers who do not switch. Suppliers are, however, free to offer other tariffs at a price of their determining.
Instead of being a price cap, as in pre-privatisation days, Flint argues that this model would act as a price to beat for competitors, delivering choice for those that want it while ensuring fair prices for those who do not engage.
So what do you think? Is this a good idea, or is more regulation and price competitiveness at the not-bothered-about-switching end going to automatically result in price rises for those of us who do switch and save?
While that seems like good news, there’s criticisms that the energy supplier isn’t doing enough for customers and that the drop should’ve been more substantial, considering the size of the decrease in the amount British Gas pay for their gas.
Comparison website uSwitch is particularly unhappy, and has accused British Gas of “short-changing” everyone.
“British Gas is the biggest energy supplier so they should really be market leading, setting the trend for the others to follow suit,” Ann Robinson, uSwitch’s consumer policy director, said. “Although the price cut is welcome, I wanted [British Gas] to do far more and almost shame the other companies into taking action. But instead we get a price cut that is far smaller than it should be. It short-changes their customers and lets the other suppliers off the hook.”
“I want all of the suppliers to give customers a decent price cut to reflect what has happened to wholesale prices. We have seen these prices falling; they are at a really low level. And we are not talking about months – it has been well over a year now.”
“The reason suppliers give for not cutting prices more is that they buy their stock in advance, and thus was purchased at a pricier level, but that excuse no longer holds water. Now is the time for big suppliers to treat customers fairly.”
British Gas sent a spokesperson out to defend the company. They said: “We’re cutting our gas prices by 5% for almost 7 million customers, taking £35 off the average annual bill. This is the second time we have cut prices in six months – that’s a total saving of more than £72 over the next year.”
“We always cut our prices by as much as we can, as soon as we can, when we see a reduction in our own costs, and we were keen to do this ahead of next winter. There are many moving parts to the bill, some have gone up, others have come down but in the round we felt able to cut gas prices by 5%.”
Npower have been so crap for so long, that recently, they were ordered to give power away for free by way of apology. That’s not say things have been fixed – they said themselves, that the omnishambles that they’re currently running will run into 2016.
So with that, it shouldn’t surprise anyone that the boss – Paul Massara - of the lousy energy firm has left his position ‘by mutual consent’ after the energy company posted ‘unexpectedly negative’ half-year results. Unexpectedly negative! The delusion is palpable at Npower, clearly.
Massara’s oversaw company results earlier this month, which showed that Npower’s profits had dropped by two thirds. Of course, this might be something to do with customers leaving the company en masse, because they’ve been so thoroughly useless for such a long time. In the last year alone, Npower lost 300,000 customers.
The company are still being investigated by regulator Ofgem for their shambolic behaviour, and it is almost certain that there’s going to be some big fines waiting for them in the future.
Npower’s parent company, RWE, said that the exodus of customers, coupled with their own incompetence, has hit UK profits by 65%. Again. That’d be Npower who have just said that their negative results were ‘unexpected’.
RWE chief executive Peter Terium said: “At this time we need a CEO at RWE Npower who will focus on fixing the basic process improvements and has a track record of implementing operational process changes.”
This, of course, has put a dent in their profits (good) and that they’ve acknowledged that they’ve lost a load of customers in the process. Their parent company, RWE, said Npower’s half-year profits were down 60% to £38m.
Customers (or, presumably ex-customers by now) have seen bills not being sent at all, or multiple bills being sent to homes. The whole thing has been an absolute nonsense.
Only last year, Npower said that they were getting a hold of the problems and managing to get on top of them. Obviously, that isn’t the case, which most of us already suspected. Thanks to this, Npower were forced by the Energy Ombudsman, to give free energy to customers who had waited far, far too long to get their complaints dealt with.
Unsurprisingly, Npower were the most complained about energy company in 2014. It will be no surprise if they end up topping the tables again at the close of this year.
Npower are pretty hopeless. And that’s putting it kindly. They’ve been so dire when it comes to handling complaints, Ofgem have ordered them to give free energy to customers whose complaints have not been resolved in good time.
The regulator said those that had an Ombudsman ruling, that is outstanding against npower (for more than 28 days) should benefit from this and have their debts written off. Of course, npower are still shruggling, wobbling their bottom lips and saying that it is all the fault of a new billing system they brought in.
They’ve been using that excuse for ages now. So long, that they’ve confessed that they’ve had problems with the bills of 700,000 households. Useless. Absolutely useless.
And this investigation was kicked off by Ofgem over a year ago, and they’re not finished yet, doling out fines as they go along, such is the magnitude of npowers haplessness.
With all this in mind, npower said: “For these 1,000 customers, npower will write off any debt on their account and also provide free energy until the ombudsman’s rulings have been applied in full. This measure has been agreed with Ofgem and the Ombudsman. If there are any customers similarly affected after today, 21 July, we will review on a case-by-case approach in line with the Ombudsman’s current policy and also provide free energy where the remedy has not been completed due to our process or system.”
“Npower continues to make steps to improve its service, including halving overall complaints and reducing Ombudsman complaints by nearly 10% since the beginning of this year, but sometimes a delay in finally resolving a complaint can occur, for which we apologise.”
The company is called Our Power Energy, and will launch with 35 founder organisations, which includes housing associations and local authorities, and wants to be doing business by the end of 2015 as an Ofgem-licensed gas and electricity supplier.
Our Power Energy want to cut utility bills for disadvantaged communities by up to 10% cent compared with the usual shower that make up the Big Six. And they think that their buying power will help save communities up to £11 million on bills over the next five years.
This particular scheme has been backed with a very healthy £2.5 million loan from the Scottish Government and £1 million from Social Investment Scotland. Could something like this work in the rest of the UK? If it works in Scotland, then you can imagine it branching out or, being taken up by other initiatives.
Scottish Social Justice Secretary, Alex Neil, said: “Fuel poverty is at its highest level in a decade with fuel prices having risen by an inflation-busting seven per cent between 2012 and 2013. A recent investigation by the Competition and Markets Authority (CMA) found that millions of energy customers are paying too much for their energy bills.”
“That is why the Scottish Government has invested £2.5 million in Our Power. It will be the first independent and fully-licensed energy supply company registered as a non-profit distributing organisation owned by its members.”
“This ground-breaking company will make a real difference to tens of thousands of low income households who are currently disadvantaged in the energy market and struggling to pay their bills.”
Yesterday, British Gas announced a 5% price drop on bills, and it looks like the rest of the Big Six will be following suit.
Of course, Npower, EDF, E.On, SSE and Scottish Power don’t want to be missing out or made to look like awful, greedy, upright swine compared to British Gas. What do you mean that’s what you think of them, regardless?
Energy companies usually announce their changes in September, but with British Gas making the move earlier than usual, you’d expect the rest to follow suit.
If that’s the case, there’s a lot of money to be saved – whether they could’ve passed on more savings is up for debate (we think they could have) – with Npower having around 5.1m customers in the UK, EDF Energy serving 5.5m domestic and business customers, E.On UK having 5m domestic and business customers, Scottish Power having somewhere in the region of 5m domestic and business customers and SSE with over 8m customers. That’s a lot of people getting money off their bills, which we should be vaguely grateful for.
However, the problem is that the industry has seen much bigger drops in wholesale energy costs, so really, they should be doing more for their customers.
Alongside all this, the Treasury has launched an investigation into the sector, regarding the savings that utilities companies could, or should be passing on to everyone. If they are found to be stitching us up, then the government may well intervene… but then again, they probably won’t because, as we all know, all politicians are arseholes.
It has been reported that 400 or so staff at British Gas and EDF Energy have been given body armour in case someone attacks them. Of course, no-one should be in fear of getting stabbed for simply doing their job, but then, even this hasn’t seen the powers that be thinking that there might be a problem with how much they’re charging: they see issuing stab vests as a solution, rather than making their products affordable.
The vests are being given to staff tasked with investigating energy theft, or those who have to fit homes with pre-payment meters to sort out customers who are in debt.
“Electricity and gas theft is a serious crime which puts lives at risk and adds unnecessary costs to customers’ bills. Because of the nature of the work our energy theft teams do, we’ve made protective clothing available to them,” said a spokesperson for British Gas.
A spokesman for EDF Energy added: “Our staff are issued with stab vests when carrying out debt-related customer visits or visits where the meter has been tampered with.”
Obviously, attacks are rare, and most customers vent their anger in the traditional way – shouting down the phone and the like – but really, this is a bleak indictment of the state of the energy market in the UK.
Around 500 jobs are at risk, after E.ON decided to close the Killingholme power station in North Lincolnshire. And yes, there’s a place called Killing Home. We hope there’s a village nearby called Murder Bed or something.
Anyway, back to the serious business. E.ON have said that market conditions for both gas and coal-fired electricity generation were “very challenging” and that they are too big to overcome.
The power station at Killingholme had previously been mothballed, but it ended up being returned to service in 2005.
Tony Cocker, chief executive of E.ON UK, said: “My main priority is our colleagues at Killingholme and we will continue to do all we can to help them through this difficult and uncertain time.”
“I would also like to thank everyone who has made a contribution to Killingholme throughout its lifetime – from the time the power station was a plan on a drawing board through to the team that will continue at the site in the months ahead to ensure it remains safe and secure. Ultimately, the decision to close the power station is not one we have taken lightly and, as our actions have shown, we have exhausted every possible option to try to keep the plant viable.”
“The reality, however, is that market conditions for both gas-fired electricity generation and coal-fired are very challenging and in this particular case too big to overcome which has resulted in 900MW of generation capacity being permanently removed from the UK’s power network.”
The unions aren’t best pleased, with GMB’s Phil Whitehurst saying: “This is bad news for at least 500 workers and their families in the supply chain who operate, service and maintain what is a viable combined cycle gas turbine station that has years of life left in it.”
“New low carbon generating capacity is needed but we are watching a funding crisis develop around building new power stations in the UK. We need a long-term plan for energy in UK. Leaving it to the market won’t work.”
We’re all always hearing about the big bad big six energy companies, and all the hundreds of thousands of complaints they receive every year from dissatisfied customers. However, what comparisons of straight complaint numbers does not factor in is the fact that the big six have many more customers than the smaller energy firms. Now, for the first time, the ombudsman has published the first set of quarterly figures ranking the number of accepted complaints for the 10 largest energy companies in the UK per 100,000 customers. And the results are interesting.
The data is published in the form of one-page summaries of complaints data by energy company, and when the details are compiled into a table, some of the placings might come as a surprise. The full top (or bottom) ten is as follows:
However, the fact that serial offender Scottish Power has the unhappiest customers is unlikely to be startling, dwarfing the rest of the table with its massive 173.02 complaints per 100,000 between January and March 2015. However, fellow big sixer SSE has actually had the fewest complaints referred to and accepted by the ombudsman, at just 4.16 per 100,000 customers, upheld in the same quarter.
Similarly, the smaller energy companies are perceived as more customer friendly, yet First Utility comes in third for most complaints, at 39.4 per 100,000, followed by Co-operative Energy and Ovo on 19.56 and 14.46 complaints respectively, making them less effective at keeping customers happy than three of the Big Six, Eon, EDF and British Gas.
Chief Ombudsman, Lewis Shand Smith, commented: “The publishing of this data for the first time puts consumers in complete control of their energy provision, giving them greater transparency about the complaints that we receive about energy companies… For the first time this means we can publish not only the numbers of complaints, but also by company name. Energy companies have already made great strides to better inform consumers and this will help ensure consumer grievances are addressed quickly.”
Which? executive director, Richard Lloyd, also commented on the table, saying “Our research shows energy companies are among the worst for resolving complaints, so suppliers need to start turning this round to improve on the low levels of trust in the industry.”
We’re used to energy companies being villainous in their dealings with poor, cold consumers, but what is more grating is when self-proclaimed consumer champions are found out to be dodgy dealing as well. Two price comparison sites found themselves hit where it hurts (in the share price) over concerns surrounding an Ofgem investigation.
This week, price comparison website MoneySupermarket.com admitted it had been asked to provide information to the energy regulator to help establish whether to include it as part of an ongoing enquiry. Ofgem had previously announced that it was investigating whether two or more companies that providing a “supporting service” for the energy industry were in breach of competition law. In simple terms, Ofgem suspect the price comparison sites were price-fixing with each other. Which is not normally something a bona-fide consumer champion would do.
The investigation could take “a number of months” and if found guilty, the companies could be fined “up to 10% of prior-year group revenue,” according to analysts at UBS bank. Moneysupermarket.com’s stock dropped by almost 10% at the news, and Zoopla, who own uSwitch,who are also ‘helping Ofgem with their enquiries’ also suffered a further 5% fall in their share price,despite news of their investigation on the issue having already leaked out.
Ofgem are reportedly keen to downplay the involvement of the comparison sites, whose income derives almost wholly from advertising on their sites and commissions paid on switches, as they don’t want to put consumers off using them. While comparison sites are, in principle, a good thing for consumers, and Ofgem is keen to get people checking the competitiveness of their bills, savvy consumers will always remember that in a market-driven company there has to be something in it for the comparison makers. After all, they are not, shackle-free consumer champions in reality, but listed companies with shareholders looking for a return to answer to…
It has been reported that nearly 4 million households in the UK owe £507m to energy firms, between themselves. That’s up 9% on last year, which shows that energy firms aren’t doing enough, despite dropping bills, which were too high in the first instance.
In a survey conducted by uSwitch, they discovered that the number of homes that had fallen in energy debt had grown by 260,000. 30% said that they actually owed their energy company more than they did than a year ago, which is pretty grim news.
The average debt per household is £130, even though over half (54%) of consumers saying that they’d been rationing their energy use in a bid to keep bills down. Considering that the average temperature over winter was the warmest in years, it shows that the current tariffs aren’t working.
One of the problems is that energy bills are still confusing everyone, with customers still struggling to switch accounts (we’ve got advice on how to switch). The new energy and climate change Secretary Amber Rudd has written to suppliers asking for further cuts, and of course, the energy sector is looking at a competition inquiry.
uSwitch director of consumer policy, Ann Robinson said: “Not only are more households in the red to their energy supplier, but the amount they owe has gone up, despite the recent price cuts. Energy suppliers must urgently pass on double-digit reductions to their customers – many of whom have admitted to going cold this winter in an attempt to keep their bills down.”
Energy firms are under the spotlight again. After being called out for making too much money last week, now the energy regulator Ofgem has issued a statement slapping the wrists of energy firms who are too quick to force prepay meters (PPMs) on customers struggling to pay, saying that energy should do “all they can to support customers” and to “protect” vulnerable customers who are in danger of self-disconnecting.
Of course, energy firms are always cast in a villainous light, but given the “increase in the number of PPMs installed for non-payment of debt”, Ofgem are now going to “investigate” why the numbers are rising. Ofgem have today stated, very clearly, that “installing pre-payment meters under warrant should be used as a last resort by energy suppliers when consumers get into debt. It is a way to prevent a customer from being disconnected. Suppliers can only install a prepayment meter where it is safe and reasonably practical for the consumer to use.”
It seems that Ofgem suspect that energy companies are not using PPMs as a way to help their customers out of a sticky situation, but are instead leaning on people in order to get their money faster. Ofgem have also said that energy firms might not currently be doing “all they can to support customers struggling to pay” and recommend that, before resorting to PPMs, firms should offer energy efficiency advice and signposting to social support, in line with Ofgem’s own commitment to work with Citizen’s Advice to help identify and protect vulnerable customers. They also want to see common sense applied when setting outstanding debt repayments on the meter, making sure these are at an affordable level “taking into consideration the customers’ financial circumstances.”
In addition, Ofgem note that some energy firms seem to be making it difficult for PPM customers to switch suppliers, even where switching would help customers who are struggling with bills. Ofgem want PPM switching to be easier and they are formalising energy suppliers’ current voluntary practice of allowing PPM customers with a debt of up to £500 per fuel to switch, by making it an obligation.
But of course, it’s easy for Ofgem to say these things and the energy companies to nod sagely and agree, without actually doing anything differently. However Ofgem is also going to require firms to evidence their practices and the actions they have taken to protect customers, particularly where there is additional ‘vulnerability’. For example, if customers are relying on energy for medical reasons, or have mobility problems that limit their ability to access the prepayment meter or top up the meter, the supplier will not be allowed to install a prepayment meter.
So what do you think? Should energy customers do more, or should customers take more responsibility for paying their own energy costs or face the punitive PPMs? Does it make a difference if we’re talking about a pensioner in a freezing cold home, or a working-age family?