Wednesday, May 04, 2022
The great energy rip-off
As if it were not bad enough that energy companies like BP are posting record profits on the back of huge price-hikes, and families struggling to pay for electricity and gas, the Times reports that many of these suppliers are facing “substantial fines” as regulators begin an urgent investigation into claims they are ripping off customers by inflating direct debits to ease cashflow problems.
The paper says that companies hve been given three weeks by business secretary, Kwasi Kwarteng, to respond to allegations of “completely unacceptable behaviour” relating to unjustified direct debit increases:
Boris Johnson came under increasing pressure on the energy issue yesterday as BP, which announced its highest quarterly profits for 14 years, undermined his reluctance to impose a windfall tax to ease household bills by saying such a move would not affect its investment in Britain. The oil giant reported underlying profits of £4.95 billion for the first three months of the year, more than double those of a year earlier, as it benefited from a sharp rise in oil and gas prices.
Although oil giants’ profits are rising, suppliers are paying more for gas and electricity and passing the costs on. A price cap restricts the amount that customers can be charged, and some suppliers are paying out more for energy than they can pass on. As a result, government sources believe that some suppliers are trying to use higher customer direct debits to build up cash reserves to cover their short-term costs.
Energy companies must inform customers if they are increasing the amount taken each month by direct debit and give them an opportunity to challenge rises based on meter readings. However, since the energy price cap rose by 54 per cent last month there have been anecdotal reports of companies increasing direct debits beyond what customers are using without justification and ignoring or rejecting appeals for a review.
Kwasi Kwarteng has given energy companies three weeks to respond to claims they have increased customers’ direct debitsKwasi Kwarteng has given energy companies three weeks to respond to claims they have increased customers’ direct debits
Ofgem, the energy regulator, has given suppliers three weeks to respond to these reports and has warned them that customer credits cannot be used to “prop up their finances”. It said: “Our top priority is to protect consumers and we recently wrote to suppliers to alert them that we are commissioning a series of market compliance reviews to ensure, amongst other things, that they are handling direct debits fairly.”
Kwarteng said: “Some suppliers have been increasing direct debits beyond what is required. The regulator will not hesitate to swiftly enforce compliance, including issuing substantial fines.”
The scale of the problem is unclear but he has suggested that Ofgem use its powers to levy fines of up to 10 per cent of turnover if abuse is found.
Surely, government cannot ignore this crisis for much longer. They must do more to help consumers.
The paper says that companies hve been given three weeks by business secretary, Kwasi Kwarteng, to respond to allegations of “completely unacceptable behaviour” relating to unjustified direct debit increases:
Boris Johnson came under increasing pressure on the energy issue yesterday as BP, which announced its highest quarterly profits for 14 years, undermined his reluctance to impose a windfall tax to ease household bills by saying such a move would not affect its investment in Britain. The oil giant reported underlying profits of £4.95 billion for the first three months of the year, more than double those of a year earlier, as it benefited from a sharp rise in oil and gas prices.
Although oil giants’ profits are rising, suppliers are paying more for gas and electricity and passing the costs on. A price cap restricts the amount that customers can be charged, and some suppliers are paying out more for energy than they can pass on. As a result, government sources believe that some suppliers are trying to use higher customer direct debits to build up cash reserves to cover their short-term costs.
Energy companies must inform customers if they are increasing the amount taken each month by direct debit and give them an opportunity to challenge rises based on meter readings. However, since the energy price cap rose by 54 per cent last month there have been anecdotal reports of companies increasing direct debits beyond what customers are using without justification and ignoring or rejecting appeals for a review.
Kwasi Kwarteng has given energy companies three weeks to respond to claims they have increased customers’ direct debitsKwasi Kwarteng has given energy companies three weeks to respond to claims they have increased customers’ direct debits
Ofgem, the energy regulator, has given suppliers three weeks to respond to these reports and has warned them that customer credits cannot be used to “prop up their finances”. It said: “Our top priority is to protect consumers and we recently wrote to suppliers to alert them that we are commissioning a series of market compliance reviews to ensure, amongst other things, that they are handling direct debits fairly.”
Kwarteng said: “Some suppliers have been increasing direct debits beyond what is required. The regulator will not hesitate to swiftly enforce compliance, including issuing substantial fines.”
The scale of the problem is unclear but he has suggested that Ofgem use its powers to levy fines of up to 10 per cent of turnover if abuse is found.
Surely, government cannot ignore this crisis for much longer. They must do more to help consumers.
