Ofgem asks energy companies to explain billing

Thursday, 18 August 2011 12:52

The energy regulator Ofgem has written to the big six UK utility companies asking them to explain how they calculate bills that cover a period when two sets of prices are applied.
The move follows the announcement from EDF Energy that it had overcharged 100,000 customers between October 2003 and May 2010. After customers had called in with their actual meter readings following the receipt of an EDF estimated bill, EDF’s automated system charged the higher rate on all units after a general price increase had been implemented.
The mistake has occurred when a bill is charged at two rates or tiers because part of it covers a period before a new pricing structure was introduced.
Ofgem is concerned that some energy suppliers have added the higher charge to too high a proportion of customers’ bills. An Ofgem spokesman told The Times newspaper that it wanted to make sure the issue didn’t affect consumers in the future.
The spokesman said: "We have written to suppliers yesterday asking each of them to provide details of the approach they take to apportioning price increases and an explanation of the checks they employ to ensure accuracy."
"We also want to understand the way in which estimated and actual bills are reconciled.
"We want suppliers to explain what mechanisms they use when prices are raised to ensure that consumers pay the higher price only for units consumed following the price increase," the spokesman added.”
The news comes the day after gas and electricity price increases from British Gas takes effect. Its standard gas tariff will go up by 18 per cent and the standard electricity tariff will increase by 16 per cent. The price for dual fuel customers is likely to increase by around £190 a year.
Scottish Power has already increased the cost of gas and electricity to its customers and Scottish & Southern Energy, Npower and E.On have all announced price rises that will take effect in the coming weeks. EDF have not yet announced a price rise but has pulled its cheapest fixed-rate tariff from the market.

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