Npower fined £26m over its chaotic bills and customer service

THE energy giant Npower has been fined a record £26million for running a chaotic billing system that failed around half a million customers. The German- owned company also mishandled millions of complaints from householders who had no idea what they were being charged for heat and light.

The fine was imposed by the industry regulator Ofgem, which has warned the firm it faces a ban on advertising for new business unless it improves.

The £ 26million penalty will be split between some of the worst-affected customers, who will be contacted by the company, and a charity that helps people struggling with bills.

Npower has faced intense criticism for failing to pass on massive falls in the wholesale cost of gas and electricity to struggling customers this winter.

Yesterday’s fine makes it clear the company has also been guilty of shocking failures in customer service.

The problems stem from a new computer billing system installed to cut costs. As many as 500,000 people got inaccurate bills or none at all for months on end, despite repeated requests.

Others were presented with demands for monthly direct-debit payments that were wrong and unfair.

Those who were due a refund found it impossible to get the money they were owed and when householders complained, they could not get through to the company or found themselves trapped in a maze of red tape.

In the summer, Npower was ordered to write off the energy bills of 1,000 customers because it had repeatedly sent them the wrong statements and failed to deal with complaints properly.

The company is owned by the German firm RWE, which was guilty of similar shabby customer service when it owned Britain’s largest water company, Thames Water.

Ofgem’s chief executive, Dermot Nolan, said: ‘Npower failed its customers. Not only have its billing and complaint-handling procedures been chaotic, it treated many of its customers poorly, which is completely unacceptable.

‘Npower’s management failed to act quickly enough to protect its customers when things went wrong with changes to its IT system.’

He added: ‘It’s important that all suppliers ensure they follow the principles of treating customers fairly at all times.

‘The payment of £26million sends a strong message to the industry that we expect them to act quickly and effectively to ensure a good customer experience.’

The executive director of the consumer body Which?, Richard Lloyd, said: ‘Ofgem is right to dish out a hefty fine as Npower has clearly failed its customers.

‘Time and again, we’ve found the biggest suppliers aren’t getting the basics right on customer service.

‘Energy suppliers must up their efforts to treat their customers fairly by providing better customer service and fairer pricing.’

Npower said it was ‘very sorry’ and had agreed to customer service targets with Ofgem, including reducing the number of late invoices and complaints by the end of June next year.

If Npower fails to meet these targets, it will have to stop all domestic sales and advertising until they are met.

Simon Stacey, the company’s managing director for domestic markets, said: ‘The last few years, since we changed the systems that support our domestic business, have been very disappointing for our customers and for Npower.’

In the wake of its long-running IT problems, Npower has lost 200,000 customers this year and made a £48million loss in the first nine months of the year.

The £26million fine is the largest for a domestic energy supplier, according to Ofgem. It is more than double the £12million levied against E.On in July last year for mis-selling energy.

‘It is completely unacceptable’