One of the UK’s biggest power companies has been caught with its hand in its customers pockets –again, and has been forced by regulators to pay back nearly $100m in refunds.
Electricity giant NPower which was fined nearly £2m last year for mis-selling contracts is to pay 1.8m customers an average of $50 each following a three year row over changes to its pricing structure. The internet is alive with furious customers telling the tales of their own rip-off, like this customer who calls the company “the devil’s own vomit.”In 2007 the company altered its tariff so that all customers had to pay a fixed monthly number of more expensive initial gas units – known as primary block units. Previously the amount of primary units charged varied according to the time of year. Some customers ended up paying paying for more fuel than they used.
NPower executive Richard Frost admitted on BBC radio today that the company had failed to tell customers what was happening. “If we had been clearer about what we were doing, perhaps there wouldn’t have been so much anger.”
The company which has 6.5m customers in the UK, paid back £1.2m to 200,000 of them last year after an investigation into the tariff changes by energy regulator Ofgem. But it was only following more consumer complaints and pressure from UK consumer watchdog Consumer Focus , that the company agreed to reassess millions of other bills.
The company defended itself today saying that at the same time as charges for primary units were rising, other prices were lowered prices and some discounts introduced. “Most customers benefited overall, but some smaller customers were billed for more than the usual number of primary units, “ said Frost.
Npower says it will write to all those affected over the next two months, even if they are no longer customers. It will send them letters with cheques that can be cashed at local post offices. The reimbursements will range from £1 to £100.
This is the latest in a series of mistakes that has seen NPower enrich itself at its customers’ expense. Last month energy regulator Ofgem announced that N Power is one of four of the “big six” UK energy suppliers it is investigating over concerns of mis-selling to customers. This was in addition to the fine set in 2008.
Npower, Scottish Power, Scottish and Southern Energy, and EDF Energy all face questions over face-to-face and telephone sales of energy contracts. Ofgem said it had received information from a variety of sources suggesting they could have breached new rules.
Research by the regulator in 2008 found that, of those who switched their energy supplier, more than half did so in response to contact with a salesman.
But it found that many who switched following doorstep sales ended up on a more expensive tariff because they were misled, or found it difficult to compare bills.