POWERGEN 2

Powergen was accused of giving customers a raw deal after it revealed that its profits have soared tenfold. E.ON, the German parent company of the firm announced that Powergen's profits soared to £296million in the first quarter of 2007. It made £29million over the same period last year and analysts at banking giant JP Morgan estimate E.ON is on track for record UK earnings of more than £860million for 2007 as a whole. Its profits rose 21% to a staggering £2.25billion in the first quarter of 2007 alone. Campaigners say that the delay in cutting prices has created billions in profits for an industry which has pushed through repeated bill rises recently.

A recent survey claimed gas firms had effectively stockpiled £490million of customers' money after failing to adjust direct debits in line with falling prices. Powergen cut the price of gas by 16% and electricity by 5% from April 30 this year but data from the consumer group Energywatch shows its gas prices are still 74% higher than in January 2003, when aggressive price increases began across the industry. Powergen remains the second most expensive supplier out of the 'big six' companies for dual-fuel customers paying by direct debit, according to data from uSwitch. Only EDF Energy is more expensive.

E.ON defended the profits announcement, saying the rise in profits reflected a dramatic improvement from unusually poor conditions at the beginning of last year. A cold winter in early 2006 and shortfalls in wholesale gas supplies drove up wholesale prices but it did not fully pass on these increased costs to consumers, the company argued. Against that background, the latest results reflected 'a return to normal', a spokesman added. (Source: Daily Mail, May/07)

Derbyshire pensioner David Barnes decided to change from Powergen to Atlantic Gas & Electricity in March 2003 as he believed that the change in supplier would save him at least £50 on his annual electricity bill. Soon after he initiated the changeover, he received a welcoming letter from the energy company, which was later bought by Scottish and Southern Energy.

The letter contained a date for the change of supplier but, a month later, the transfer had still not taken place and Mr Barnes rang Atlantic again. They informed him that Powergen had objected to the transfer. Mr Barnes contacted Powergen and a series of telephone calls and letters ensued trying to persuade the company to release him.

He said, "They said that I owed them money. That was utter balderdash as I'd paid them by direct debit and provided them with regular meter readings." Mr Barnes then turned to Energywatch, an independent consumer watchdog, for assistance and he was eventually allowed to change in April 2004. A spokesman for Powergen said that the problem was caused by a problem in the training of staff who deal with accounts. He said, "It was a genuine error." And a costly one.

Record numbers of complaints are being filed against power companies, many of them relating to overpayments which are boosting their coffers by hundreds of millions of pounds. Energywatch, the energy industry watchdog, says it received 7,183 complaints in the 12 months to October 2004, nearly 600 a month. Gas and electricity companies are believed to be making millions of pounds a year by sitting on huge piles of money taken in overpayments from those paying their bills by direct debit. As direct debit amounts are typically fixed, it means that in summer, when energy use is much lower, massive cash surpluses are built up.

Energy Helpline, a price comparison service, claimed power companies were at one time sitting on up to £1.7bn which rightfully belonged to their customers. The figure will be lower in the winter months but is still believed to run into hundreds of millions of pounds. By placing this money on deposit overnight, power companies can earn 4.7% interest. An average deposit of £1bn through the year would give them £47m interest at our expense. The average UK household was believed to be £125 ahead on its gas and electricity bill in the summer. Consumers are entitled to have their money back at any time. But Energywatch says power companies are dragging their heels when it comes to making refunds. The worst offenders are British Gas, NPower and Powergen, it says.

If you have made overpayments that you would like back, contact your supplier and ask for a refund. Make a note of the date and who you spoke to. Get them to confirm that the refund will be made by the time of the next bill. Allow two weeks. If the refund hasn't been made, go back to the company to make a formal complaint. It should give you the correct address to write to. Allow one more week. If you still haven't been refunded, contact watchdog Energywatch on 08459 060708 or at www.energywatch.org.uk and follow its 'How to make a complaint' section. Energywatch has the power to refer cases to the regulator Ofgem. (Source: Mail on Sunday)

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