Are energy companies abusing their power?

Regulator Ofgem is to investigate whether the UK's energy giants are misleading consumers...

by MT Staff
Last Updated: 19 Aug 2013
Four of the UK's 'big six' gas and electricity suppliers are going to be investigated by the energy regulator, amid concerns that their telephone and face-to-face sales people mislead punters into paying higher tariffs. So Npower, Scottish Power, Scottish and Southern Energy, and EDF Energy - all of whom Ofgem suspects may have breached new rules - will all go under the power ranger's spotlight.

Far be it from us to come down on the side of the meddlesome regulator, but in this case we are sympathetic; choosing an energy tariff system is baffling. One of the MT staff conducted an experiment last year: when someone turned up at the door suggesting he was paying too much for his energy bills, he decided to see what happens when you invite them in, make some coffee and just listen openly to what they had to say. Answer: you end up on a higher tariff.

And we're clearly not the only ones. Research by the regulator in 2008 found that, of those who switched their energy supplier, more than half did so in response to contact with a salesman. And 48% of gas customers and 42% of electricity customers were worse off as a result. While door-to-door sales are a perfectly valid way for energy companies to attract new business and explain their tariffs, that can't be right.

In order to stamp out such shenanigans, Ofgem changed its regulations in January: now the companies' sales people have to supply customers with an estimate before face-to-face sales are concluded, comparing the new offer with their existing deal - thus reducing the potential hoodwink factor.

Ofgem is threatening 'strong action' if it finds that energy firms are failing to comply. Theoretically, it has the power to fine a company up to 10% of its turnover if a breach is discovered, and although it's unlikely to go that far, any fines would certainly sting: both nPower and London Energy have previously been forced to cough up the best part of £2m for similar indiscretions in the past.

But maybe the punishment should fit the crime. We reckon Ofgem should turn up unannounced at the energy firm's HQ and present the board with a range of options for fines, based upon entirely incomprehensible equations and sliding scales - then refuse to leave until they've picked the biggest one.

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