April 9, 2012

Ofgem Supports Consumers – The Big Six Better Watch Out!

Filed under: Energy News — Tags: , , — Newsroom @ 12:36 pm

New proposals, which will be outlined tomorrow, will give Ofgem, the energy regulator, additional powers which will enable them to force energy providers to compensate consumers directly if they don’t handle their complaints properly or are guilty of mis-selling their products.  Ofgem will be free to decide on the level of compensation to be paid to customers, as there won’t be a capped maximum figure.  This will bring Ofgem’s powers in line with other regulatory bodies such as Ofcom and the Financial Services Authority.

Under the current system, Ofgem can fine energy suppliers up to ten per cent of their turnover for licence breaches.  However the payments don’t, at the moment, benefit the customers as the fines go directly into the government’s pot.  The proposed changes, if approved, should be a part of the energy bill, to be published later in the year.

During the past few months Ofgem has imposed fines on the energy providers.  In November 2011 they fined npower £2m for the mishandling of customers complaints.  This was some months after Ofgem fined British Gas £2.5m for a similar offence.

EDF Energy has recently decided to pay £4.5m to 70,000 vulnerable customers who will now receive refunds of approximately £50 each.  This was after the Ofgem decision that the energy provider had been guilty of making misleading sales claims.  A statement which was released by Ofgem at the time said the EDF Energy had “offered” to pay the customers.  Under the new proposals Ofgem could impose the repayment, rather than the voluntary stance suggested by the energy provider.

During the past five years Ofgem has been successful in “persuading” the energy providers to make some compensation payments which have exceeded £6m.  Additionally it has imposed £18m in fines.  A statement from Ofgem said “These powers, which we have been seeking from government, would strengthen our ability to take more targeted action against companies that are found in breach of their licence.”

Ed Davey, energy secretary stated “I want to make sure that consumers are protected and that the independent energy regulator has the powers it needs.  We are looking at beefing up Ofgem’s powers further so that should the need arise it can make companies compensate consumers directly, rather than necessarily having to rely on a voluntary approach.”  Ofgem will still be able to impose fines on the energy providers if it is required.

Energy UK which is the trade body which represents the electricity and gas companies has commented “The industry welcomes the opportunity to respond to the consultation and will actively engage with the energy regulator to see how these proposals work in practice.”

It has become obvious during the past few months that trust in the big six energy providers had gradually disappeared with every new price rise, and revelations about mis-selling to customers, together with the poor response from them in relation to complaints.  Perhaps this will redress the balance, so that consumers aren’t constantly fearful about increasing prices and the lack of care offered by the energy providers.

November 8, 2011

Make the Time and Reduce Costs

Filed under: business energy — Tags: , , , — Newsroom @ 12:25 pm

The final price increase from EDF Energy, one of the big six energy providers is due to come into effect this Thursday, 10th November 2011.  The increases of 15.4% for gas and 4.5% electricity rises are the last increases to be permitted this winter.

Ofgem, the energy regulator, received agreement from all of the six largest energy suppliers – which provides over 99% of electricity and gas for the UK – that there won’t be any further increased charges until at least 1st April 2012.

Small business users are, in particular, struggling with these costs, as their energy bill is, in many cases, their greatest overhead, apart from rent or mortgage payments.  In many cases it is even higher than their business rates.

It is really important for business owners to start taking control of these costs so that they are aware from where the energy is being expended.  It isn’t possible to reduce costs if it isn’t clear where they are coming from!

The hardest thing, as every self-employed person knows, and which applies equally to small business owners, is to actually start a job.  A business owner has many demands on his time, and it is all too easy to prevaricate from doing something which he doesn’t want to do.  There are always ten things which are more important, so that the items which aren’t as interesting are quite easy to put to the bottom of “important things to do today”.

It isn’t particularly exciting or fulfilling to see where savings can be made in the amount of electricity and gas being used – however, it won’t take long and the potential savings are worthwhile.

Self-employed people don’t usually have any staff members at all, so need to deal with everything themselves and know how easy it is to delay doing something.  In the main, though, the problem is that of getting started.  If there is something we are unsure about because it is a little different, we delay and make excuses not to start.  There is always a “reason” for not getting on with the job!

Business owners don’t have much spare time, and to spend it by trying to reduce energy usage may not be a high priority.  However, the time spent is worth cash – cash which could help the business in future.

The business owner who really doesn’t know where to start towards reducing energy costs would be best served by contacting an independent energy broker – they are not tied to any of the energy providers and can therefore access the amount of electricity and gas being used by the business at present, and will work with the business owner to establish where savings can be made, and will negotiate a new contract (obviously, subject to the terms of the existing contract) to ensure that the business owner pays as little as possible for future gas and electricity.

October 18, 2011

Does the Customer Win…What Do You Think?

Filed under: Energy News — Tags: , , — Newsroom @ 12:35 pm

At last there appears to be some movement from the big six energy suppliers in response to the investigations being undertaken by Ofgem, the energy regulator.  These big six suppliers provide over 99% of the energy in UK households.  At a summit meeting held yesterday which was attended by representatives of all of the six providers and consumer groups, there was recognition that there is a problem through the industry.  The energy providers have lost the trust of a high proportion of the UK population.

Letters are going to be sent out to over eight million consumers suggesting that they should change to a lower tariff for either their electricity or gas, and also reminding customers to ensure that their homes are sufficiently insulated.

The government will provide a new website giving information about energy saving measures together with information regarding cheap tariffs.

The energy providers have stated that they will all make their bills easier to understand.  The new bills will also have a “signpost message” which will be on the front of the bill to advise customers if cheaper prices are available.  All of the energy providers which do offer free insulation will send a letter to vulnerable energy customers, and there are about four million consumers in this category, to tell them that they are eligible for this free insulating service.

Scottish Power, the first energy provider to increase their charges this year, and which are the most expensive with the average duel fuel customer paying £1391, yesterday promised that they won’t make any further increases until, at the earliest, 1st April 2012.

British Gas – the largest of the providers, has announced that they are extending their “free insulation” offer which was due to finish at the end of this month.  The offer will now continue until the end of March 2012.  All British Gas domestic customers will now be eligible to receive loft insulation and cavity wall insulation at no cost to themselves at all.  They have also confirmed that a new raft of measures is being introduced designed to assist both domestic and business consumers in saving energy and ultimately, reduce their bills.

Domestic consumers who have their energy supplied by British Gas have been promised that there won’t be any further increases in charges over the winter, and they will also assist consumers to find the lowest prices through their “Tariff-Checker” scheme.  They also claim that customers who have both the loft and cavity wall insulation fitted will achieve savings, from a dual-fuel bill, in the region of £200 each year.

British Gas has also promised to assist business customers by offering energy efficiency and debt advice, together with offering flexible payment plans.

However, British Gas are also warning that in the longer terms prices will increase because of the rising charges from the wholesale energy suppliers.

Perhaps matters will improve for customers, certainly during this winter.  However, in the longer term it certainly appears that there is one step forwards, another sideways and then a further step backwards.

October 3, 2011

Small Changes – Big Savings

Filed under: Energy Efficiency — Tags: , , — Newsroom @ 2:22 pm

The big six gas and electricity suppliers appear to be in the news every day.  Ofgem, together with the accountants appointed by them, are considering whether the actions of these energy providers are reasonable.

Smart meters are starting to be rolled out throughout to customers throughout the UK and the energy companies have been asked to confirm that they will not use the installation as a vehicle for trying to persuade customers to change suppliers.  Until very recently all the big six companies had been “door stepping” as a method of persuasion.  “Door stepping” is when a salesperson calls at a residence, without an appointment, and tries to convince the home owner or tenant, to change energy providers to their company.  Unfortunately, some of the methods used by these sales people haven’t been appropriate, and in some cases home owners were told complete untruths in order to gain their business.

Now that these smart meters are being installed they will help the small business or home owner to know how much they spend on their energy, and the cost of using appliances.  Where there is a small household with one or two people living at a property it is easy to use the washing machine unnecessarily.  Everyone is aware that overfilling a washing machine causes problems by the machine needing to work harder to move the clothing around.  The water necessary to assist this may take additional time to heat to the correct temperature.

When there is only a small household however, the opposite tends to happen, and it is all too easy to decide to wash the few items which are in the machine.  This usually stems back to when the children lived at home, and it was necessary to use the machine every one or two days.  It became a habit which just continues even though it isn’t now needed.   A small household will probably only require the use of a washing machine, twice in one week – once for items of clothing, and the second time is for bed linen; obviously there will be exceptions.

Another expensive appliance is the oven which can take up to fifteen minutes to get to the correct temperature.   It is always better to cook several items at the same time, and if it is possible to cook more of one dish than is used for one meal that is even better.  In other words, batch cook, for most of the meals for the week, and if cooking casseroles or stews, make enough for two or three meals, and then freeze them when cold.  It doesn’t cost any extra money to fill the oven to capacity so it is well worth cooking as many items as possible.  Freezing extra meals is also useful for when there are busy days with little time to make meals.

There are many other ways in which by a little adjustment in the way we normally carry out these chores can result in substantial savings on the energy bill.  The sooner we all start to adapt to change, the more money can be saved.

August 29, 2011

If They’ve Got It Wrong …Complain, Loudly!

Filed under: Energy News — Tags: , , , — Newsroom @ 10:05 am

With the news that the major energy providers have decided to increase their price to all customers in the near future, perhaps the question should be asked as to why these increases couldn’t have been revoked or at least capped.  Now that they have been announced and as the regulators are involved and studying these rises, perhaps they can confirm that if they are deemed excessive, that there will be a repayment, or at the very least, credit given against these latest round of price hikes.

During the past few months Ofgem has started fining energy companies when they feel the rules have been broken – or severely compromised.  British Gas were fined £1m in June 2011 for misreporting the quantity of electricity supplied and in July 2011 Ofgem fined British Gas yet again, this time the amount  was £2.5m, for not adequately responding to customer complaints.   British Gas have recently announced their half-yearly profits of £280m and just a few days later they confirmed they would be increasing their gas prices by 18 percent and also by raising their electricity charges by 16 percent.

Last week another of the major energy providers EDF admitted that they had overcharged 100,000 customers between 2003 and 2010 because of a fault in their meter reading system.  In many of these cases the amounts of money involved was fairly insignificant; however the fact that it took seven years before the discrepancies in the metering systems were noticed is fairly worrying.

These figures are just the tip of the iceberg with it appears, new and more disturbing stories being produced on a regular basis.  Although Ofgem are finally attempting to probe into the energy providers’ affairs, let’s hope that the reports which are currently being compiled by the specialist accountants appointed by them, lead to the energy providers in knowing that they have, in the future, nowhere to hide.  Genuine mistakes can, and will continue to occur, and no-one will criticise any company for making errors, as long as they are discovered promptly, apologies made to the injured parties and reasonable compensation given when it is deemed to be appropriate.

Ofgem should be aware of all disputes from the beginning and perhaps if the energy providers know they need to tell Ofgem about every complaint immediately it may encourage them to resolve the issue with greater speed.  There could even be a series of fines if the energy providers haven’t satisfactorily resolved the result within a specific timeframe.  Obviously, the more complex the problem, the longer the company should have in order to rectify it.  All disputes should be logged in a public forum, together with the outcome.

The reporting of instances involving malpractice or negligence need to happen as a matter of course, with some urgency and there should be a recognised timetable for the resolution.

August 26, 2011

Another Energy Company Squeezing…And There Are No Pips Left To Squeak!

Filed under: business energy — Tags: , , , — Newsroom @ 9:35 am

In Northern Ireland electricity bills are expected to rise steeply with Power NI increasing their prices by 18.6 percent from October.  This huge increase will affect both business and residential users and is more than four times higher than the rate of inflation.  Residential consumers’ energy bills are now anticipated to be in the region of over £2,000 per year which is about £900 higher than the rest of the UK.

The Federation of Small Businesses (FSB) is concerned that as the business user will be hit twice by these increases as they will affect both the business and household bills.  This will be another hurdle to overcome for small businesses on their way to economic recovery.  Power NI are blaming the price hike on rising wholesale oil and gas costs and say that this is the first rise they have imposed on their customers for three years.  They say that tariffs were reduced by 15% in 2009 and frozen last year, and they further explained that over the last two years the wholesale fuel used in the generation of electricity has increased by 60 percent and unfortunately they can’t hold their prices any longer.

The Utility Regulator has commented that Northern Ireland depend heavily on fossil fuels, particularly gas, in the generation of electricity which means that electricity prices are especially susceptible to increased energy costs on the international energy market.

This week has also seen the Energy regulator Ofgem increasing their investigation into the way the six major energy providers calculate their profits.  They (Ofgem) have appointed a team of specialist accountants to look at various parts of their businesses to establish how they are able to justify their increased prices.  The independent accountants view will be to improve the transparency regarding the pricing decisions made by the energy providers and clarification about the retail prices and wholesale energy costs.  The results of these investigations are expected by the end of the year.

The energy providers have increased their charges to consumers by a large amount which is sure to create anxiety and worry for both business and residential customers.  At a time when small to medium size businesses are tightening their belts these huge increases may be enough for many small businesses who were already struggling, to abandon their businesses, which will inevitably lead to further unemployment.  Business owners really must be vigilant in ensuring that they do not waste energy.  It is one of the few overheads that if the customer is careful and minimises wastage, that the bills can reduce.

Residential customers also need to ensure that they don’t leave lights switched on when they are out, and that any electrical product is switched off when it isn’t in use.  Over a period of time this will become second nature.