Npower agrees to refund customers £70 million

Npower has promised to refund nearly two million customers an average of £35 each, putting an end to a long running dispute over changes it made to its charges in 2007.

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by Victoria Bischoff on Oct 01, 2010 at 09:11

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Energy company npower has today agreed to refund £70 million to nearly two million customers who were overcharged in 2007.

Npower’s decision puts an end to long running dispute with Ofgem and Consumer Focus over changes it made to the way it charges customers in 2007.

Npower said: ‘In the spring of 2007, we lowered our prices, increased our discounts and also changed the way we charged for the first units of gas each month. It was this last element, which we call the primary block, which caused confusion and controversy’.

‘It is now clear that we did not communicate all the changes well and, as a result, some customers were convinced they had been overcharged,’ npower added.

Primary block units are the first set of gas units households use in a set period of time, and are more expensive. In 2007 npower changed from varying the amount of primary units each month according to the time of year, to charging households a fixed number of units each month instead.

Npower has always insisted most customers benefited from the changes it made, but following an investigation by Ofgem it was found the changes resulted in many low users of gas ending up paying more than they should.

Npower has now said 1.8 million customers will receive an average of £35 back, which is a marked improvement from npower’s original offer in 2009 to repay 200,000 customers an average of just £6 each.

Mike O’Connor, chief executive of Consumer Focus, said: 'Consumers have been waiting a long time for this announcement and we are pleased with the final result. Sixty three million pounds plus VAT and interest for consumers is an excellent outcome and shows a major commitment from npower to its customers'.

Npower has said there is no need for customers to do anything as it will be contacting all 1.8 million customers who are eligible for a refund in the next two months - even if the customers are no longer with npower.

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4 comments so far. Why not have your say?

It is now clear what an utterly disgraceful company nPower is. They consistently breach regulations and have a track record of incurring fines and penalties. The hard selling tactics used by their staff are equally notorious. It is time for the authorities to remove their licence to trade in this country.

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As long as the regulator allows the current practice of confusing and largely non-cost related tarrif pricing used by all the energy suppliers, this sort of 'con' will go on happening. There is no way all customers benefit from any changes to the tarrifs: all they do it for is to capture more customers and therefore a higher market share.

Each time there is a change and they do get the expected numbers of new customers, there will be an overall increase in revenue. This means more people end up paying more on average than those who see a saving in their bills.

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In my experience as a customer with npower, you have to keep a wary eye on them to avoid facing unwarranted leaps in charges. My advice is resist any increase in your monthly direct debit amount as it is most likely based on dubious calculations, just so they build up a surplus on your account which they can keep in their bank account instead of yours!

Also, check you are on the most competitive tariff as they have more than twenty, and if you've been with them for some while it's most likely you are being overcharged. They, of course, will not let you know this is the case!

Hope this has been of some help.

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Ann Barton

Oct 04, 2010 at 11:40

I agree with Alan Dow, I give monthly meter readings as they now only bill twice a year. I've had to ask for the £100 discount to be applied to our account

each year, and in our case they didn't recalculate the DD when changing tariff so recently it was £113 to £175 and after I had contacted them back to a reasonable £120 !

People power pays off, this thread refused to give in .... http://forums.moneysavingexpert.com/showthread.php?t=822299

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