POWERGEN

Powergen has been fined £700,000 for preventing more than 20,000 domestic energy customers from switching to new gas or electricity suppliers. The penalty comes after a 10-month investigation by energy regulator Ofgem which consumer watchdog Energywatch has said was the biggest such fine.

Powergen was found to have prevented direct debit customers with arrears from switching energy supplier. Ofgem said Powergen had now revised its customer switching procedures. Direct debit and pre-payment customers were not allowed to switch to another supplier while their account was in arrears.

Powergen told customers that they must clear their arrears or else they would not be allowed to switch. However, under Ofgem rules Powergen should have allowed consumers to switch providers and then clear their account arrears. "These customers entered into agreements under which they were making regular payments for their energy supplies. They were then unfairly stopped from switching to a new supplier," John Mogg, Ofgem chairman, said.

Powergen, which has six million customers, said the mistake had been caused by an error in a part of its credit management operations. "This was a genuine error. As soon as we became aware of the problem, we temporarily suspended all debt objections and have since overhauled our training and operational procedures, implementing more rigorous controls," said Nick Horler, managing director of Powergen Retail.

Powergen said it was unlikely that it would appeal against the ruling and that it had written to all customers involved. The firm said that a small number of customers had been paid compensation, averaging around £20. Consumer watchdog Energywatch said that the Ofgem fine was more than three times greater than any other levied for a similar offence.

"The penalty imposed by Ofgem demonstrates the seriousness of its offence and gives a strong message to other supply companies that this wilful blocking of consumer choice will not be tolerated," said Energywatch chief executive Allan Asher.

Powergen is throwing pensioners off its cheap-rate scheme because they're using too much gas and electric. The company admitted to axing 35,000 elderly customers from its special Staywarm tariff, which offers one low fixed price. Adam Scorer, of energywatch UK, said the tariff was popular with pensioners because it allowed them to use unlimited gas and electricity for a set amount.

But now Powergen have capped the amount they can use, forcing them on to more expensive, variable tariffs. Mr Scorer said, "The company's actions fail to meet the basic requirements of customer care, and simple good manners." A Powergen spokeswoman said the firm had been forced to put an upper limit on the amount of energy that could be consumed under the deal, because high users were "jeopardising the product" for others.

She said, "No other company in the industry offers such a tariff and we've learned a lot in the four years we've been running it. We've identified a number of high users who are Staywarm customers, using a lot of energy and jeopardising the future of the product for others. We had to put a system in place to protect our customers who are the most vulnerable and most likely to be in fuel poverty."

Powergen is pushing up prices for its EnergyOnline customers by 14p a day, equivalent to some £54 a year. Electricity prices will increase by 8.9% and gas by 9.6% despite giving an assurance just two months previously that it would not impose further price rises. Powergen's latest hike is the same as those announced in November 2004 for ordinary residential customers. At the time the company insisted that its EnergyOnline customers would not be affected, an assurance it has now effectively torn up.

A spokesman for Powergen, whose prices soared by 17.6% in 2004, and will now rise again, said the company had held off making the latest increase for as long as possible. He added, "It comes as a direct result of unparalleled rises in wholesale costs which are affecting all energy suppliers, many of which have already announced price increases. Wholesale costs have risen 39% for electricity and 49% for gas in the last six months." (Source: Mail on Sunday)

Powergen is putting up its gas prices by 24.4% and electricity prices by 18.4%. Consumer watchdog Energywatch described Powergen's price hike as "appalling" and "further proof that the market is not delivering price protection for Britain's energy users." And according to the regulator Ofgem, the average power bill across all suppliers in the UK, before taking Powergen's increase into consideration, was £495 for gas and £327 for electricity, assuming that the bills were paid quarterly by cheque. (Source: BBC News, Feb/06)

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