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EDF fined £2m for poor service

July 24th, 2009 | No Comments

Energy supplier’s fine for failing to offer connection is one of highest imposed by Ofgem

EDF Energy Networks, the company which supplies electricity to 8 million customers across London, East Anglia and south-east England, has been fined £2m by the energy regulator for customer service failures.

Ofgem imposed the fine on the French-owned company after it repeatedly failed to offer connection to potential customers – typically in new property developments and large housing estates – quickly enough.

“Customers should not have to accept poor service in any part of the energy market,” said Sarah Harrison, Ofgem’s managing director for corporate affairs. “All energy companies should be in no doubt that if they are failing to offer good customer service Ofgem will take tough regulatory action.”

EDF’s licence states that it must present new customers with a connection offer within 90 days, but an Ofgem investigation uncovered more than 100 occasions where this requirement had not been met.

“We recognise that EDF Energy has now taken steps to improve its connections service, but they should have taken this action some time ago. EDF Energy has already paid around £450,000 in compensation to affected customers, and this is reflected in the level of Ofgem’s penalty,” Harrison added.

The £2m fine is the joint second-highest penalty ever levied by Ofgem, behind the £30m fine imposed on National Grid for hindering the rollout of smart meters. In 2002 it fined London Electricity – now part of EDF – £2m for misselling gas and electricity contracts on the doorstep.

EDF said it “greatly regrets the delays experienced by some customers”.

“EDF Energy notified Ofgem of this issue at the time and the company provided information to the regulator on a total of 108 cases where it had taken more than the three-month time-frame outlined in our licence,” the company said. It added that it recognised the seriousness of the issue and had made “significant changes” to avoid a repeat.

Ofgem’s chief executive, Alistair Buchanan, last month urged the six biggest gas and electricity providers to improve their customer service levels, after research found that less than 25% of customers were happy with the way their complaints were handled.

The regulator singled out EDF Energy, saying it was investigating concerns that it was not recording complaints correctly.

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Water bills to fall due to five-year price cap

July 23rd, 2009 | No Comments

Ofwat’s initial decision is likely to spark protests from water companies, which called for an average £28 above-inflation hike in their business plans

Households will benefit from a £14 fall in average water bills to £330 before inflation over the next five years, industry regulator Ofwat said today.

The 4% fall was announced in Ofwat’s “draft determination” on price limits for water and sewerage costs in England and Wales for 2010-15.

But the regulator’s initial decision is likely to spark protests from water companies, which called for an average £28 above-inflation hike in their business plans.

Ofwat’s chief executive, Regina Finn, said: “We understand times are hard and we have listened to what customers have told us.

“They want a safe, reliable water supply at a reasonable cost. People can shop around for the best deal on many things, but not water.”

The regulator said its draft determination would still allow water companies to “invest extensively” in the network and spend almost £21bn over the five-year period.

More than £4bn will be invested in improving drinking water and protecting the environment, Ofwat said.

Spending plans will also reduce the risk of extreme weather – such as 2007′s floods – disrupting supply for around 10 million people, it added.

The regulator will make its final decision on prices in November before the new regime comes into force next April.

Before then it faces talks with water firms which had called for a more generous deal to reflect tougher conditions – such as rising bad debts in the recession – and higher financing costs following the credit crunch.

Finn added: “Our decisions allow efficient, well-run companies to invest in the right place at the right time for the right price.”

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Inflation dips below 2% target

July 14th, 2009 | No Comments

A broader measure of inflation using the retail prices index recorded the sharpest drop in the cost of living since 1948

Britain’s inflation rate dipped below the government’s 2% target for the first time in almost two years last month as cheaper food and soft drinks helped keep the cost of living in check, according to official figures released today.

Data from the Office for National Statistics showed inflation as measured by the consumer price index (CPI) fell from 2.2% in May to 1.8% in June.

A broader measure of inflation using the retail prices index recorded the sharpest drop in the cost of living since 1948. Prices were 1.6% lower last month than they were in June 2008.

Higher oil prices and more expensive imports caused by last year’s weakness in sterling has meant inflation in recent months has been higher than City expectations.

Today’s figures suggest, however, that the effects of Britain’s recession-hit economy are causing inflationary pressures to ease and will allow the Bank of England to persist with its twin strategy of ultra-low interest rates and boosting the money supply through quantitative easing.

Before June, consumer price inflation had been above the central bank’s 2% target since October 2007, peaking at 5.2% last September.

The biggest downward effect on the annual CPI rate came from food and non-alcoholic drink prices, which fell last month but rose in the same month last year.

Meat, bread, fruit, vegetables and dairy products all contributed. There was also downward pressure from furniture prices, which rose less than last year.

One upward pressure on the index came from the price of computer games, which rose by more than a year ago.

Analysts believe that inflation will continue to slow in the coming months.

“Much of the fall in RPI inflation reflects weaker mortgage payments, house prices and lower oil prices; all of these are excluded from core CPI inflation, which has been less volatile. But even core CPI inflation should wane over the next six months as the margin of spare capacity in the economy exerts greater downward pressure on underlying pricing pressures,” said Colin Ellis, European economist at Daiwa Securities.

Philip Shaw, chief economist at Investec, said he expected that CPI would have fallen to 1% by this autumn.

The newest member of the Bank’s monetary policy committee, Professor Adam Posen, told MPs that he was more concerned about undershooting the 2% inflation target than overshooting it.

“While the 2% target is right, if you overshoot a little one month here or one month there, it doesn’t necessarily mean you get an inflationary cycle,” Posen told the Treasury select committee during his appointment hearing.

“What Japan has demonstrated is that once you fall into a deflationary situation, it’s very hard to get out,” he added.

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Asda cuts petrol price to 99.9p a litre

July 9th, 2009 | No Comments

• ‘There is no justification for any major retailer selling fuel above £1,’ says supermarket
• Average charge for unleaded petrol is now 103.8p a litre

Supermarket chain Asda cut its fuel prices to 99.9p a litre today, saying there was little justification for charging more than £1 at the pumps.

The price cut was made on petrol and diesel at the company’s 176 forecourts.

Commercial director David Miles said: “There is no justification for any major retailer selling fuel above £1 a litre – that is why we are delighted to be able to reduce petrol and diesel to 99.9p a litre for all our customers in line with falling costs.

“Asda is offering value to all drivers nationwide and we can guarantee all our customers that they’ll get a fair price for their fuel no matter what they fill up with at the pump.”

Diesel prices have previously been higher than petrol, but Asda said current costs meant that this should no longer be the case.

According to website petrolprices.com, the average charge for unleaded petrol yesterday was 103.8p, ranging between 99.9p and 115.9p, while the average for diesel was 105.3p, ranging between 99.9p and 117.0p.

The price of crude oil has been on the rise in recent months, but at just over $60 a barrel it is still less than half the $140 level it reached at its height last year.

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Time to switch energy suppliers

July 3rd, 2009 | No Comments

Many of the 4.6m fixed-rate deals on gas and electricity are about to expire. That could add £100 to bills, warns Miles Brignall

Given the soaring temperatures this week, probably the last thing on your mind is your gas and electricity bills. But if your fixed-price tariff is about to expire, you need to start thinking about switching.

According to the industry regulator, Ofgem, around 4.6m households have fixed or capped price deals for gas and electricity.

They were particularly popular last year when prices were going up, or threatening to rise. But with a large number expiring in the next few weeks and months, consumers are being advised to think about their next move. Remember, it takes around six weeks to switch supplier.

Our table shows which fixed-price deals are about to end and when. In almost all cases, those who took out one of these products have done well – particularly as the collapse in wholesale prices has once again failed to feed through to consumers.

As with a fixed-rate mortgage, customers coming off these deals are automatically put on to the standard tariff, which, for typical gas and electricity consumers, will add an extra £100 a year to their bills.

The price comparison website uSwitch says the average fixed or capped energy deal, taken out in July last year, costs £1,045 a year, compared with the average standard plan which is now costing £1,145 a year.

However, it is perfectly possible to save this amount – and a bit more – by switching to a cheaper deal, which will almost certainly be one of the internet-based tariffs. Switching straight on to another fixed/capped deal may not be the best option.

“Without a doubt, those who fixed last year, avoiding the price hikes that hit other households, have done really well,” says Will Marples of uSwitch.com, who warns consumers not to accept a new fixed or capped deal from their supplier without doing their homework first.

“Online energy plans are offering consumers the lowest prices, but just 5% – 1.3m households – are signed up. I would urge anyone coming off a fixed plan in the near future to follow three simple steps to make sure they are getting a good deal: move to dual fuel, pay by direct debit and sign up to an online plan,” he says. A look at the switching websites will show you there are four companies – British Gas, npower, E.ON and ScottishPower – vying for your business with the cheapest internet deals. Which one is best for you will depend on whether you use more gas than electricity, and where you are in the country.

Incredibly, given that we have had national power companies for 20 years, electricity prices from the same company still vary enormously depending on postcode. For this reason it is worth going on to one of the accredited websites and inputting your details to find out which is cheapest in your area. British Gas (WebSaver 3) deliberately prices itself as cheapest for average users. But, if your consumption is either side of typical, you may find that npower’s Sign Online 15 is cheaper – although to get the maximum discount you must stay with npower for 12 months.

British Gas has the added promise that it will be 6% cheaper than its standard tariff – useful if prices ever come down again (as they should).

Joe Malinowski, owner of comparison and switching website TheEnergyShop.com, agrees the online tariffs are the way to go. He is keen on ScottishPower’s Online Energy Saver 5 deal.

“It’s the second cheapest, in five regions, and near-ish the top for everyone, bar those living in London and the south-east. It offers cheap prices and has the added benefit that it’s capped until June 2010. If you are in one of its target areas, it’s well-worth considering,” he says. • Energy firms were this week told to improve their handling of customer complaints after research showed fewer than a quarter of consumers were satisfied with the way their gripes were dealt with.

In a letter to the six biggest gas and electricity supplier the chief executive of energy regulator Ofgem, Alistair Buchanan, said he was “disappointed” with the low level of customer satisfaction in complaint handling and ordered improvements by the time the regulator looks at it again next year.

Ofgem named and shamed EDF Energy after checking whether it was properly recording all complaints. Even the best companies – E.ON and Scottish and Southern – left just 29% of customers happy, while the worst – npower – satisfied just 16% of its consumers.

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Ofgem urges better customer service

June 30th, 2009 | No Comments

Energy regulator writes to ‘big six’ suppliers to express disappointment at the low level of customer satisfaction in complaint handling

Energy firms were today urged to improve their handling of customer complaints after research showed fewer than a quarter of consumers were satisfied with the way in which their gripes were dealt.

In a letter to the six biggest gas and electricity suppliers, the chief executive of the energy regulator Ofgem, Alistair Buchanan, said he was disappointed with the low level of customer satisfaction in complaint handling and expected to see improvements when the regulator looks at the issue again next year.

“It is in suppliers’ best interests to ensure that the service they provide is of a high standard,” he wrote. “This is clearly an opportunity for them to raise the bar to retain existing customers and attract new ones.

“With the systems and processes in place, the challenge now for companies was to really listen to what their customers were saying and look at how they could address their concerns.”

Ofgem told major gas and electricity firms to up their game and treat customers fairly, or potentially face penalties, and it named and shamed EDF Energy after a check “raised concerns as to whether [the supplier] was properly recording all complaints”.

Although Ofgem’s independent audit found suppliers had made the necessary systems investments and updated their processes in preparation for new complaint handling standards introduced last year, the changes have failed to convince consumers who gave the regulator a now familiar litany of power company shortcomings.

Consumers were particularly unhappy with the number of times they had to contact a supplier, the attitude of some staff, suppliers who promised to call back but didn’t, and the fact that suppliers often viewed the problem as resolved when in the customer’s eyes it was not.

Even the best companies – E.On and Scottish and Southern – left just 29% of customers happy after a complaint, while the worst – npower – satisfied just 16% of its consumers.

Audrey Gallacher, customer services expert for consumer watchog Consumer Focus, said the poor ratings came as no surprise.

“It is clear that the new standards are not yet paying dividends for consumers and that energy firms need to really listen to, and act upon, their customers’ complaints. To help combat the high levels of complaints about energy billing the government must also roll out smart meters as soon as possible to make bills more accurate.

“In the meantime we would urge consumers who are dissatisfied with the service they receive to vote with their feet and switch supplier.”

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Energy bills must rise to be green

June 29th, 2009 | No Comments

Royal Society report says current government policy is not enough to pay for green technology

Consumers will need to pay more for energy if the UK is to have any chance of developing the technologies needed to tackle climate change, according to a group of leading scientists and engineers.

In a Royal Society study to be published today, the experts said that the government must put research into alternatives to fossil fuel much higher among its priorities, and argued that current policy in the area was “half-hearted”.

“We have adapted to an energy price which is unrealistically low if we’re going to try and preserve the environment,” John Shepherd, a climate scientist at Southampton University and co-author of the report said. “We have to allow the economy to adapt to higher energy prices through carbon prices and that will then make things like renewables and nuclear more economic, as carbon-based alternatives become more expensive.”

Shepherd admitted higher energy costs would be a hard sell to the public, but said it was not unthinkable. Part of the revenue could be generated by a carbon tax that took the place of VAT, so that the cost of an item took into account the energy and carbon footprint of a product. This would allow people to make appropriate decisions on their spending, and also raise cash for research into alternatives.

“Our research expenditure on non-fossil energy sources is 0.2% of what we spend on energy itself,” said Shepherd. “Multiplying that by 10 would be a very sensible thing to do. We’re spending less than 1% on probably the biggest problem we’ve faced in many decades.”

He said that the priority should be to decarbonise the UK’s electricity supply. Measures such as the government’s recent support for electric cars, he said, would be of no use unless the electricity they used came from carbon-free sources.

Though the creation of the Department of Energy and Climate Change (DECC) was a good move, Shepherd said: “We’ve had a lot of good talk but we still have remarkably little in the way of action.”

He cited the recent DECC proposals on carbon capture and storage (CCS) as an example. The department plans to legislate that any new coal-fired power station must demonstrate CCS on a proportion of its output. Once the technology is proven, a judgment made by the EnvironmentAgency around 2020, power plants would have five years to scale up to full CCS.

Shepherd said the proposals were not bold enough. “Really, it needs to be ‘no new coal unless you have 90% emissions reductions by 2020′. That is achievable and, if that were a clear signal, industry would get on and do it. It’s taken a long time for that signal to come through and now that it has, it’s a half-hearted message.”

A spokesperson for DECC argued that its proposed regulatory measures were “the most environmentally ambitious in the world, and would see any new coal power stations capturing at least 20-25% of their carbon emissions from day one”.

Ed Miliband, energy and climate change secretary, said that a white paper due next month will lay out how Britain will source its energy for the coming decades.

“This white paper will be the first time we’ve set out our vision of an energy mix in the context of carbon budgets and climate change targets. We have identified ways to tackle the challenges – we will need a mix of renewables, clean fossil fuels and nuclear and we’re already making world-leading progress in those areas. It’s a transition plan, a once in a generation statement of how the UK will make the historic and permanent move to a low-carbon economy with emissions cut by at least 80% in the middle of the century.”

The Royal Society report will argue that energy policy has been too fragmented and short-term in its outlook, with a tendency to hunt for silver-bullet solutions to climate change. “That really isn’t the case. What we need is a portfolio of solutions, horses for courses,” said Shepherd.

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