Mark Atherton
Win 100 iconic DVDs
Millions of consumers may have been overcharged by at least £25 on their gas bills by one of the biggest energy companies, The Times has learnt.
Ofgem, the energy regulator, is investigating claims that up to 2.2 million customers of npower may have been billed too much for gas usage. Energywatch, the energy watchdog, believes that excess charges could total more than £50 million.
The problem has come to light after readers of The Times uncovered apparent flaws in npower’s billing systems and alerted the watchdog, which referred the matter to Ofgem.
Energywatch is urging all npower’s gas customers to check their bills for the past 12 months. A spokesman said: “We think up to 2.2 million npower customers could have suffered from the same problem that Times readers have identified. If we are proved correct we want to know what the company will be doing to compensate those who have lost out.”
The problem centres on how many units of gas npower is entitled to charge customers each year at the higher of its two rates. In literature and on its website, the company states that the higher charge applies to a maximum of 4,572 units per annum — after which customers pay at a lower rate.
However, the company claims this figure refers to a “tariff year”, not a calendar year. In 2007, npower’s “tariff year” lasted only seven months — from April to November, when the tariff was altered — meaning that many customers ended up paying significantly more than 4,572 units at the higher rate over the course of the year.
Consumers are already facing sharply higher energy costs. Since January 2006 the average annual household energy bill has risen from £735 to £1,048, according to uSwitch, the price-comparison website. The increase for npower customers has been even steeper, from £671 to £1,056.
Since the start of 2006 npower’s gas customers have suffered no fewer than four price increases. In January 2006 npower put up prices by 13.7 per cent, and followed this up with further rises of 15 per cent in March and 17.2 per cent in October.
There was a 16 per cent cut in 2007 but this was more than wiped out by a further 17.2 per cent rise in January 2008. A typical npower gas customer now faces an annual bill of £631, compared with £466 at the start of 2006.
Domestic energy bills could rise by a further 25 per cent this year as the wholesale cost of gas surges higher.
MPs on the Business and Enterprise Select Committee have been investigating competition in the UK power market. On Tuesday, in evidence to the committee, Allan Asher, the chief executive of Energywatch, accused the big six energy suppliers of being bloated, inefficient, and leaving consumers to “get it in the neck”.
The allegation of overcharging also follows accusations against npower of mis-selling. This month, it dismissed six employees after revelations that its door-to-door sales staff were lying to customers to gain new business.
The customers who approached The Times to complain of being overcharged say that a year should mean a year. David White, 67, of Maidenhead, Berkshire, said: “My contract, which I took out in January 2007, stated I would be charged 4,572 units a year at the higher price and the rest at the lower rate. But after 11 months I had been charged 5,939 units at the higher rate, meaning that I was overcharged by £41.
Andrew Beck, of Teignmouth, Devon, said that he had decided to take legal action against the company. Mr Beck, 55, said: “I have filed papers with my local court alleging breach of contract by npower. In the 12 months to April 2008 I was charged in excess of 6,500 units at the higher rate, resulting in an estimated overcharge of £120. I suspect that many of npower’s customers will have suffered from the same problem. If each annual bill was just £50 too high and npower had two million gas customers, that would be a total overcharge of £100 million.”
An npower spokesman said: “What we promise is that we won’t charge gas customers more than 4,572 units at the higher rate in a tariff year, which is not always the same as a calendar year. In our short tariff year of seven months from April to November 2007 we didn’t charge anyone more than 4,572 units at the higher price, but over a full 12 months, we did.
“This was a one-off situation — between April and November 2007 we changed our normal billing method as we brought different sets of customers on to one system. We suspended our seasonal weighting, which charges more units at the higher rate in the winter and fewer in the summer. This resulted in a number of people being charged more than 4,572 units at the higher rate in the year April 2007 to April 2008 but they should take into account that we reduced our gas prices by 20 per cent in April 2007.”
An Ofgem spokesman said: “We are asking npower questions relating to suspected inaccurate billing.” If Ofgem found that npower had breached the terms of its supply licence it could impose a fine of up to 10 per cent of the relevant subsidiary’s turnover and require it to amend its behaviour.
Industry sectors news at a glance. Interactive heatmap, video and podcast
Everything the Business Traveller needs to know to make a better trip
Get ready for the winter sports season, with our resort guides and snow reports
We are backing British business, what is the confidence of the nation and what businesses are succeeding?
Growing demand for energy, oil that is harder to reach and the rise of carbon dioxide emissions. We examine the energy challenge
Enjoy further reading from Travel to Fashion, Business to Sport, discover more






36-month car lease
on contract hire for
£359.99 plus VAT pm
12 months for the price of 11 and a 5% discount.
Offer ends 31/11/09
Check your free Experian credit report before applying
Car Insurance
c£100,000 + car, bonus & bens
Lord Search & Selection
Midlands
Competitive salary + NHS pens
The Council for Healthcare Regulatory Excellence (CHRE)
London
Not Specified
The Sheppard Trust
London
£31,842 – £38,378pa
Charity Commision
London, Liverpool or Taunton
Moments from Battersea Park.
For sale with Winkworth
Find out about shared ownership.
See your free Experian credit report beforehand
Book now & save over £100pp.
11 cool resorts, lowest prices... Early Booking offers 15 Nov.
20% off selected Azores holidays taken in October with Sunvil Discovery
Get covered on your travels with a superb range of policies at great prices. Visit InsureandGo.com
World Class Golf, Spa and preferential Beach Club. Private estate overlooking West Coast
Villas from £275 per night inclusive of Golf
Contact our advertising team for advertising and sponsorship in Times Online, The Times and The Sunday Times, or place your advertisement.
Times Online Services: Dating | Jobs | Property Search | Used Cars | Holidays | Births, Marriages, Deaths | Subscriptions | E-paper
News International associated websites: Globrix Property Search | Milkround
Copyright 2009 Times Newspapers Ltd.
This service is provided on Times Newspapers' standard Terms and Conditions. Please read our Privacy Policy.To inquire about a licence to reproduce material from Times Online, The Times or The Sunday Times, click here.This website is published by a member of the News International Group. News International Limited, 1 Virginia St, London E98 1XY, is the holding company for the News International group and is registered in England No 81701. VAT number GB 243 8054 69.