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Citizens Advice Bureau

Overpayment errors creating customer care ‘ticking time bomb’

960 640 Stuart O'Brien

Citizens Advice has found regulators have allowed water, energy, broadband and telephone networks to overcharge customers by £24.1 billion over the past fifteen years.

The charity is calling for companies to return some of this to customers through a rebate on their bills and for regulators to stop this happening again.

The research follows its 2017 report, which found Ofgem made errors in setting price controls for energy networks, resulting in energy customers being overcharged £7.5 billion over an 8-year period. After the charity highlighted these concerns, 3 energy network companies returned some money to consumers.

Citizens Advice has now found this was the tip of the iceberg. The same errors have been made by Ofgem over a much longer period and by regulators in other markets including water, broadband and phone networks over the past 15 years.

This research shows misjudgements by the regulators (Ofgem, Ofwat and Ofcom) on key decisions have meant customers have been paying far too much for the pipes and wires that connect energy, broadband, phones and water to their homes.

Citizens Advice asserts these sectors include companies that face little, or no, competition to drive down the price they can charge their customers. Instead, regulators tell the network companies how much they can charge by setting a price control. Customers then pay the charges for these networks as part of their water, energy, broadband and phone bills.

These overpayments partly occurred because regulators made forecasting errors. They predicted that costs, such as debt, would be higher than they in fact were. Regulators also over-estimated how risky these businesses were for investors.

The charity is recommending that, instead of forecasting costs, regulators should use available market data to calculate costs and adjust their estimates of investment risk. This would avoid consumers paying too much in future.

While several energy and water companies have taken steps to return some money to customers, Citizens Advice is calling for all firms to provide a voluntary rebate to their customers. If they don’t, the government should step in.

Gillian Guy, Chief Executive of Citizens Advice, said: “Regulator error has meant customers have been charged too much by energy, broadband and phone networks for far too long.

“At a time when so many people are struggling to pay their essential bills, regulators need to do more to protect customers from unfair prices. They have started to take steps in the right direction but it is vital they continue to learn from their past mistakes when finalising their next price controls.

“Companies need to play their part in putting this multi-billion pound blunder right. They must compensate customers where they have been paying over the odds. If they don’t government needs to intervene.”

Image by William Iven from Pixabay

Gas

Here are the best and worst UK energy providers for customer service

960 640 Stuart O'Brien

The Citizens Advice Bureau has revealed the energy companies with the best and worst customer service records in the UK.

Extra Energy received the lowest score of Citizens Advice’s star rating system for energy suppliers for the second time – with a lower overall score.

The company received 2.05 stars, lower than the 2.5 stars it received for the period between October and December 2016. The firm has previously received record low scores for its handling of customer complaints.

The star rating system is designed help people find the right energy supplier for their needs. Suppliers are awarded a score out of 5 stars based on a combination of 5 factors, including how complaints are dealt with, and how highly customers rate the supplier’s customer service.

The star rating for each supplier is shown alongside the price of available deals in Citizens Advice’s price comparison tool. This enables people to work out the best deal for them based on cost and how the company treats its customers.

On the complaints handling measure, Extra Energy delivered the worst score recorded by Citizens Advice (1,916 per 100,000 customers) for the period between January and March.

The supplier also received low scores when it came to billing and ease of contact – scoring 2 out of 5 for each). The company did, however, receive a score of 5 out of 5 for switching, by successfully carrying out 99% of energy switches within 21 days.

Examples of the problems with Extra Energy reported to Citizens Advice include people being unable to get through to the company to give meter readings, and people being charged twice for the same bill.

Some people have also reported problems with back-billing, with one Extra Energy customer receiving an unexpected bill for £4,500, after the company failed to collect payments for 18 months.

Scottish Power has made the biggest improvement in the star rating, from 2.75 stars in March to 3.15. The company has continued to improve in its complaints handling since its customers experienced a number of problems following the introduction of a new billing system in 2013.

Gillian Guy, Chief Executive of Citizens Advice, said: “Customers should know what they’re paying for when choosing an energy supplier. How easy it is to contact your supplier, how clear your bill is and how easy it is to switch are all important factors when choosing an energy supplier.

“We have found that some energy suppliers have made improvements in the service they provide, but it is disappointing that others appear to be getting worse.

“It’s important that all energy companies are constantly trying to improve, to make sure they deliver the best service they can to consumers. This must include sending out accurate timely bills, having the right number of staff to answer phone calls quickly, and having the right processes to deal with complaints quickly and effectively.”

The energy supplier star rating awards energy suppliers a number of stars out of five for the following factors:

  • How well energy suppliers handle customer complaints
  • The number of switches the supplier successfully carries out
  • How highly people rate their supplier’s customer service
  • How easy people find it to understand their bills
  • Whether the supplier is signed up to the switch guarantee that commits them to switching a customer within 21 days

The ratings for January to March 2017 were:

SupplierStar rating January to March 2017

Ecotricity – 4.4

E (Gas and Electricity) – 4.1

Flow Energy – 3.9

Economy Energy – 3.85

EDF Energy – 3.75

SSE – 3.75

British Gas – 3.7

Utilita – 3.4

Utility Warehouse- 3.4

E.ON – 3.15

Scottish Power – 3.15

Ovo Energy – 3.1

npower – 3

First Utility – 2.9

Green Star Energy – 2.85

Co-operative Energy – 2.6

Spark Energy – 2.3

Extra Energy – 2.05