OVERCHARGED!
How this man checked his energy bill and discovered big firms reap millions of pounds too much – as customers are...
A LITTLE-known rule introduced by the energy regulator to simplify tariffs may have led to ‘overcharging’ on household gas and electricity bills by tens of millions of pounds a year. Here, we explain how one man’s back-of-an-envelope calculations uncovered the overcharging.
FORMER construction manager Steve Watson has used his retirement constructively. So productively, in fact, that he spotted a discrepancy on his energy bill that proves that energy companies can routinely overcharge their customers.
His quest to understand why his bill was always inflated by a matter of pence has led him to discover that many customers are paying higher prices than those quoted in their contracts.
Steve, 70, and his wife Mary, 62, are dual fuel customers of Sainsbury’s Energy, a subsidiary of British Gas.
They signed up to a Fixed Price February 2016 tariff earlier this year, with quoted gas prices of 3.28p per kWh, electricity prices of 9.29p per kWh and standing charges of 26p per day – all inclusive of VAT.
But when Steve carefully examined a bill covering 65 days from the end of February to the end of April, his double-checking came out with a bill 14p cheaper than he was being charged for gas.
He says: ‘I realise the individual impact is small, but across all energy customers it would be huge.’
Baffled, Steve raised his concerns with the supplier. It responded by saying that its prices are indeed higher than what it says in his contract – at 3.2856p for gas and 9.2985p for electricity – but it is bound by the rules of regulator Ofgem to shorten prices to two decimal places when quoting them to a customer.
And it says it is not compelled to round up or down when using the narrowed figure.
A spokeswoman for Ofgem confirms: ‘As part of our reforms to make it easier for consumers to compare tariffs and engage in the energy market, we have required suppliers since March 2014 to shorten the energy tariff prices they quote consumers to two decimal places.’ But Steve says that regardless of how many decimal places are used and whose idea it is, what is stated in a contract should be honoured – no more, no less.
Unhappy with the explanation from British Gas, he took his complaint to the Energy Ombudsman, who agreed with him. It conceded his sums were accurate and said it did result in an overcharge.
British Gas was required to make a £5 refund for overcharging Steve, along with a £25 goodwill payment for a shortfall in service – in other words, for failing to communicate the issue effectively to him.
But the Ombudsman’s investigation officer also confirmed that British Gas was following the correct industry procedure – one she appreciates ‘can appear misleading’.
Other energy suppliers are also being given free rein to charge customers more than what their contract suggests.
If all gas and electricity customers were paying inflated prices on the same scale as himself, Steve estimates households could be overpaying energy bills by £27million a year.
Despite complying with the Ombudsman’s requests, British Gas maintains that Steve’s bills are accurate – and that he was not overcharged.
A spokeswoman for the Energy Ombudsman says: ‘We have brought the issue raised by Steve Watson to Ofgem’s attention and are in talks with it to resolve the matter.’
Ofgem has also confirmed to The Mail on Sunday that it is ‘in dialogue with the Ombudsman about the issues raised by Steve Watson’.
Meanwhile, Steve admits he is obsessive about monitoring the bills that come through the letterbox of his Durham home.
He says: ‘We have done all we can to minimise costs – extra insulation, double glazing, radiator reflectors and we change energy suppliers for a better deal at the end of any agreed term.
‘I check my bills and query any- thing I do not understand because energy companies often make errors.
‘There is no point trying to save energy and then be overcharged for the little that you do use.’