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nPower Escapes Ofgem’s Ultimate Sanction

npowerIn a surprise announcement, Ofgem has revealed that nPower met it’s first set of targets in August and as a result will be allowed to continue with its outbound telephone sales activity.


As recently as June Ofgem had said:


“Failure to meet monthly targets will result in nPower ceasing all proactive telesales to new and existing customers until they are met.”


Ofgem had gone further challenging nPower by saying:


“nPower customers have suffered service failures for too long, that’s why Ofgem has secured binding commitments from npower to reduce its bill backlog or face curbs on sales, alongside launching a wider investigation under Ofgem’s new Standards of Conduct.


“Ofgem has been monitoring npower’s service closely and we have been increasingly concerned about the slow progress to tackle failings. nPower’s recovery plan has not delivered as far and fast as is necessary. Our analysis of complaints data also raises some serious concerns which will be thoroughly examined in our investigation.”


Now however, Sarah Harrison, senior partner in charge of enforcement at Ofgem, has said:


“Ofgem is encouraged to see that nPower has met our targets aimed at reducing late bills and we note their progress on reducing complaint numbers. But this is only a first step to turning round their customer service and billing performance.”

“We will continue our investigation into the reasons why Npower’s problems occurred.”


Ofgem had set nPower a target of the number of late bills allowed to be produced in August to be no more than 100,000.


nPower had produced 280,000 in June.


The number of late bills created by nPower in August was just 62,000.


In addition the number of complaints received by nPower was also reported to have fallen to 99,799 in August from 120,016 in June.

As a result, Ofgem lifted the threat of their ultimate sanction.

Roger Hattam, nPower Director, said:

“I’m pleased that we have met our commitment made in June to reach our billing performance target.

“We’re now billing over 98 per cent of customers on time. However, the journey doesn’t stop here as we’re working hard to make even more improvements.

“For example, we have reduced complaints to the Ombudsman by over 70% since June, but this is an area where we will be doing more. This is our own commitment to our customers.”

nPower continues to pinpoint blame for their “prolonged” poor performance on the implementation of a new billing system and have announced a swathe of new recruits to resolve issues as well as a dedicated team to manage the Ofgem relationship. Outwardly this approach appears to have been working.

But whilst improvement is to be welcomed for its long suffering customers, by nPower’s own estimate 2% of their portfolio of 2.3m customers suggests nearly 50,000 customers are still awaiting a timely bill.

Some customer will wish they hadn’t however. One such is Titos Peruvian Restaurant in London Bridge who earlier this year received an astonishing back bill from nPower for £153,481.

The reason?

Although the customer had been receiving and paying invoices, nPower in April of this year, contacted the customer to say:

“The Meter Operator originally advised that the electricity meter was a 5 dial meter. Following an investigation into the metering and readings received from the Data Collector, it became apparent that the meter was a 6 dial meter and we should have billed to 6 digit meter readings.

“The account was subsequently amended to the correct meter readings, charging for the correct consumption”.

As a result nPower wanted compensation of £153,48 for their own error.

‘Fortunately’ for Titos the period over which the ‘under’ reading occurred was caught by the ‘Back Billing’ standards to which nPower have signed up. These standards limit any backdating of invoices to a maximum of 24 months.

Because of this the payment demand was revised downwards to a still extremely hefty £48,131 covering the period from 14th April 2012 to 18th February 2014.

Despite Titos unwitting innocence however nPower has demanded repayment within 12 months at a cost of £8,020 per month, £4780.00 for the arrears plus £3240.00 for ongoing use.

Titos don’t believe they have ever or will ever use over £3,000 of electricity per month in electricity in their restaurant, in fact it is easy to believe they don’t, so how and why are they being charged so much?

One look at the unit rate Titos are paying tells us all we need to know.

With a rate of 20.88p/kWh, Titos case underlines the shocking level of overpayment by some businesses, a rate of 10p-11p/kWh would be far more market reflective. Although the back date would have been significant regardless of rate, the nigh on 100% premium Titos are paying has hardly helped matters.

Clearly Titos had been on a bad deal and hadn’t exploited the market with a partner like Business Juice but given the huge disparity in the price they are paying and the cost to deliver the energy as well as their total innocence in the matter it is incumbent on nPower to do the right thing and reduce this back bill demand even further.

Sadly however for the people of London Bridge, the result of nPower pushing for this payment is likely to mean Titos closes its doors for the last time. One wonders how many of the 100,000s of recently billed nPower customers will suffer the same fate from two errors, one entirely free of their own making and the other, of which sadly far too many SMEs are complicit – not exercising their purchasing options in the business energy market.

Business Juice remain in discussions with both Titos and nPower to bring this issue to a satisfactory conclusion.

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