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Piers Morgan and Fearne Cotton, the television personalities, have an easy job fronting a competition for teenagers just launched by npower. The energy company's “Climate Cops” campaign has virtually no need of them, or the £20 million budget earmarked for the programme. The gas bill scandal revealed in this newspaper today means npower could run away with any booby prize offered for eco-stupidity. It deserves added criticism for misleading its customers.
Npower operates a tariff that rewards bigger users of gas. In many circumstances it makes commercial sense to give financial incentives to customers to buy in bulk. For energy companies, in an age when the warming atmosphere is a constant concern, it is madness.
Npower is not the only consumer energy company that gives price perks to bigger consumers of gas. It is, astonishingly, common practice. Npower compounds the foolishness because it made customers poorer as well. It told them that higher prices would apply in the first months and, assuming a certain usage threshold was met, additional gas would be bought at a lower price. Npower's interesting definition of a year might differ from the one that, by common agreement, comprises just over 52 weeks. An npower “tariff year” could be shorter, and recently came in at just seven months.
As a result, many customers were charged for all their gas at the higher rate. No discount applied. Customers hoping for relief against the pain inflicted by higher oil and gas prices felt a more acute pain instead.
For the sake of the environment, the only appropriate way to apply a tapered tariff is to reward those who use less. This might add strain to the budgets of households already hit hard by the rising cost of fuel. But energy firms would be thanked for giving direct incentives to reduce consumption. Lower usage is one of the few simple ways to tackle the rising cost of energy while simultaneously fighting the threat of climate change.
Three things should flow from this scandal. The first is that energy companies should rework their tariffs to ensure that there is no financial incentive to consume extra energy. Big customers, especially industrial users, might still expect to buy gas at prices that reflect economies of scale. But the unit cost should not be lowered if users consume more.
Secondly, the Government should re-examine the assurances given by the energy industry concerning corporate responsibility. Energy companies have pleaded hard in recent months. They have been at least partly successful in convincing Government that they are dedicated to reducing energy use and carbon emissions. The energy industry also says that it is working assiduously to reduce fuel poverty. Practices such as the one unveiled at npower today make it more difficult to take the assertions at face value. The industry will have to show that it practises corporate responsibility as well as preaching it.
Thirdly, npower should compensate customers adversely affected by its nonsensical “use more” tariff. Ofgem, the regulator, should be ready to force the company into retreat in case it does not act voluntarily. The customer is not only always right but also always entitled to be treated with repsect. Sparks should fly about this scandal.
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