A report just released by the Institute for Public Policy Research (IPPR) says that five million families have been overcharged for their energy by up to £330 a year by the Big Six energy providers.  The report states that loyal customers who have been with the same energy companies for years are on higher tariffs in order to subsidise cheaper prices for new customers.  Some householders are paying much more than neighbours using similar amounts of energy from the same company

The IPPR have stated that Ofgem isn’t punishing the energy suppliers enough.  There are rules in place so that energy companies should provide tariffs in line with the cost of supplying the customer.  Unfortunately, these rules haven’t been applied as some of the energy providers are using loss-leader tariffs to attract new customers.  The funds to pay for this service, comes from charging their existing customers more.  This then allows the big six energy providers to undercut deals from new energy providers wanting to join the market, reducing the competition.

In normal market conditions where existing companies are acting fairly, individual companies will try to reduce costs and increase efficiency in order to keep the prices down.  The IPPR has said that they can’t find any evidence of this happening with the six main energy providers. The report stated “Over five million people could be overcharged because tariffs are not cost reflective as required by Ofgem.  So-called loss leading tariffs from the Big Six also prevent competition as smaller suppliers cannot compete.”

Will Straw, IPPR associate director said “Our research adds to the growing body of evidence that competition is not working in the energy market.  We are calling on the Big Six and Ofgem to demonstrate whether efficiency savings are being achieved in the energy market and whether consumers are benefiting from lower bills as a result, as we would expect if competition is working.”

Mr Straw continued “We need more competition among energy companies so that households get a fairer price for their energy.  Ofgem’s previous attempts to reform the market have not delivered the changes needed.  UK consumers cannot afford further delays in bringing down bills.  He concluded “What’s worse is that poorer and older households are the most at risk of being overcharged.  Ofgem must crack down on firms found to be breaching their rules on cost reflectivity.  Energy prices are a huge burden on UK consumers.  Ofgem must act quicker, bare its teeth and enforce its policies.”

Consumer Focus, the official customer body, director of policy Adam Scorer said “This report raises a number of important questions about how competitive our energy market actually is and whether consumers lose out as a result.  There are many improvements which can be made to this market, but a good start would be to ensure that smaller suppliers can compete with the Big Six on a level playing field.”

Mr Scorer concluded his comments by stating that customers need to be sure that the energy suppliers are competing for their business, in a market which serves all customers.  If customers aren’t getting the best service from the suppliers then Ofgem needs to intervene to assist them.

Hardly a day passes without one or another of the big six energy providers hitting the news headlines.  Yesterday Greenpeace staged a protest outside Centrica’s Headquarters.   The owners of British Gas were targeted as a protest over “ripoff” energy prices.  Armed with giant energy bills which said “Your energy bill ripoff is being fuelled by gas hikes” about 65 protesters had already sealed the building by locking the doors with the large energy bills which were mounted on wood.

Thames Valley Police attended the site in the early morning after hearing that the protesters were causing a disturbance and had also blocked the road.  A police statement said “it will continue to monitor the protest in liaison with the management of Centrica and the protest organiser, to ensure that it is conducted lawfully and peacefully.”

A Greenpeace campaigner who was at the protest said “The energy company Centrica is ripping us off.  The bills they are sending out are soaring, and that’s because Centrica uses too much expensive, imported gas.”  He continued with commenting that Centrica should invest in “clean, cutting-edge renewable technology and energy efficiency” which would assist in the reduction of household bills.

Centrica has only made a statement which confirmed that the safety of their employees, members of the general public, together with that of the protesters was a priority.  It continued “To that end, we are maintaining a constant line of contact to the police, the emergency services and the local authorities” whilst also defending their energy prices with the comment that they “recognised the impact that higher energy prices are having on household budgets.”

The protest by Greenpeace is only just the start of a week which has been tagged as the “Big Six energy bash” which will climax with a mass protest to be held in London on Thursday.

British Gas to Close Southampton Call Centre

British Gas aren’t having a particularly good time at present, as they announced last week that they are going to close their Southampton call centre at the end of the year.  However, more energy should be provided to support the 550 staff members who will be made redundant.  There is a possibility that 50 customer service jobs may be able to be relocated to the Chandler’s Ford site.  That will, of course, be a relief to those members of staff whose jobs may be saved.  It won’t help the other 500 employees who aren’t as lucky.

British Gas made a statement at the time which concluded “We recognise that today’s news will be very hard for our employees and their families.  This has been a very difficult conclusion to reach but we believe that it is in the best long-term interests of our business.”

This won’t be the last we hear about the closures at Southampton and hope that there won’t be similar situations occurring with the other energy providers.  Unfortunately, more often than not, once one of the big six makes an announcement, the other five tend to follow suit.

Telephone sales people from the ‘Big Six’ energy providers are ringing small business owners and trying to persuade them to sign up to a new energy deal with them.  Potential customers are being cold-called by telesales staff who are particularly aggressive in their tone.  A report just out states that some companies are receiving multiple calls each day, not only by the large energy providers, but also by smaller agencies and suppliers.

In some instances companies that have recently moved premises are receiving calls from people who are purporting to be government employees asking for information regarding account numbers and meter reading figures.  Once they have this knowledge an energy provider is able to use it in order to take over the supply from the existing energy provider.  Sales people are even claiming to be working for non-existent organisations.  One such name being used is the ‘Meter Registrations Company’.  The volume of calls being received by some small businesses is now causing them to avoid answering their phones!   This is obviously not a good idea as it is difficult enough to find customers in the first place.  Ignoring the phone will definitely have a detrimental effect on the business.

Some brokers which are linked to the large energy providers are also targeting small businesses.  Although they claim to be able to find the best deal, this is untrue as they are effectively working with one supplier.  The only true way to find the best deal for your company is by contacting an Independent Energy Broker who has access to every energy supplier and receives the same commission regardless of which supplier he recommends.  Because of this, they aren’t under an obligation to any specific energy provider and therefore, can provide completely unbiased advice.

The Utility Intermediaries Association is a trade association for energy brokers.  Their members have to abide by a strict code of conduct.   A spokesman for them said “We have campaigned hard to put a stop to cold calling by call centres who harass the customer and use scaremongering to panic them into entering contractual agreements.  We firmly believe that the only solution is by ensuring that all telesales approaches are recorded from start to finish and that it is Ofgem’s responsibility to ensure that this is enforced.”

Domestic Householders also Being Harassed

Although business owners are having problems regarding with telesales staff, domestic customers are also receiving numbers of calls.  Telesales staff are ringing householders and asking them to change over to them.  Even when they are told that the customer has only just switched from one company to another, they are trying to persuade the consumer to change to them.

Some consumers have reported that they have received two or more calls each day, and often they are repeat calls.  When the sales person is told that the customer doesn’t want to switch, the caller either puts the phone down immediately or suggests that the customer doesn’t know anything.

There are many vulnerable people who, when badgered with this sort of call could easily become confused and end up agreeing to anything just to get rid of the sales person.  Energy providers that stoop to these kinds of tactics should be reported to Ofgem instantly.