Friday, 1 October 2010

Npower gas customers to get a £70m refund

Nearly two million homes overcharged for gas are to be refunded, in one of
the biggest pay-outs of its kind.

Energy company Npower has agreed to hand back £70m following a long-running
row over changes it made to the way it charged customers in 2007.

The firm admits it had not communicated the changes well, and £1.8m people
are to receive an average refund of £35.

Npower says it will write to all those affected over the next two months,
even if they are no longer customers.

In 2007, the company started charging households a fixed monthly number of
more expensive initial gas units - known as primary block units. Previously
the amount of primary units charged varied according to the time of year.

At the same time, Npower lowered prices and introduced some discounts. As a
result, some low-use customers were billed for more than the usual number of
primary units, leaving them out of pocket.

The company has always insisted most households benefited from the changes,
but following an investigation by the industry regulator Ofgem, Npower
initially agreed to repay 200,000 customers an average of £6 each.

In a statement, Npower said "Although the vast majority of our customers
benefited from the combined effect of the changes, some, who were low users
of gas, did not"

Watchdog Consumer Focus continued to campaign and some customers started
legal action.

Npower conducted a review of everyone who was a gas customer at the time and
it has now agreed to make a much bigger payment to 1.8 million people.

The refunds will range from £1 to £100, with an average refund of £35.

In a statement, Npower said "We're sorry that the complexity of the changes
we made caused confusion. We're now doing all we can to improve our
communication with customers."

Npower, which has 6.5 million customers in the UK, will be writing to those
affected and offering payments that can be cashed at the Post Office.

Head of Consumer Focus Mike O'Connor said it was an "excellent outcome" and
showed a "major commitment from Npower to its customers".

"Consumer Focus has worked closely with Npower to ensure that refunds are
made fairly and that no customer loses out," he said.

"A huge amount of work and collaboration has resulted in the right thing
being done by Npower for its customers and we welcome this.

"It has been an great example of how consumer organisations can work with
industry to deliver a fair deal for consumers."

Energylinx is delighted with the move as it shows just how much the market
has moved on since it was privatised as previously the voices of consumers
would have gone unheard.

Regardless of this positive gesture from npower, Energylinx would encourage
all customers to carry out a comparison as soon as possible. With winter
fast approaching the typical customer will see their day to day consumption
increase by as much as 400% in coming months so now is the time to get onto
the best tariff.

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