Energy suppliers paying fines to industry regulator Ofgem is not an uncommon thing. However for some providers like Npower, repeated rule breaches can see them pay millions for their blunders.
In the past several years, Npower paid over £28.5 million to Ofgem’s redress fund as punishment for its many failures in complaint handling, reporting errors, abandoning calls, and billing.
Npower had to pay a whopping £26 million in fines in 2015 because it failed to provide satisfactory services in the areas of complaint handling and billing.
An investigation by Ofgem revealed that the company had issued more than half a million late bills between 2013 and 2014. Furthermore, many of these bills were inaccurate and contained questionable calculations.
The company introduced a new IT system in 2011, which Npower cited as the reason for the billing mishaps that ensued.
Some two million complaints were sent to the company, mostly relating to these errors in billing. However, Npower also failed to provide a timely resolution to customers’ issues, or to keep its billing commitments to customers, which likely caused worry and stress to many.
Npower made mistakes when handling complaints too – a pafticular issue was their miscategorisation of unresolved grievances as being resolved. Furthermore, there were some cases where a single issue had been reported many times, and it all added up to a nightmare for customers trying to follow up on their complaints.
The firm also failed to inform clients that they had the option to escalate their issues to the Energy Ombudsman if the situation remained unresolved for a significant amount of time.
Dermot Nolan, then CEO of Ofgem, maintained that Npower failed its customers with its chaotic complaint handling and billing procedures. He also said that the unfair way in which Npower has treated its customers is completely unacceptable.
In 2014, Npower was fined for £125,000 for having submitted incorrect reporting data regarding its Renewable Obligations (RO) and Feed-in Tariff (or FiT) schemes.
Npower had previously forfeited its RO certificates and was fined £896,900 for the offence. It also had to pay £63,000 as a result of the FiT reporting error. These sanctions were made to alleviate the impact of the firm’s error on the market.
The RO scheme requires energy suppliers to obtain some of their supply from renewable sources. The scheme orders the firm to give an incentive to small-scale renewable energy generators via FiT payments. Ofgem oversees this scheme on behalf of the government, and payments are made based on current market share.
Npower’s error consisted of using inaccurate information when calculating the electricity supply it provided to customers. In 2010-2011, data was under reported at 0.08%, which worsened to an 0.28% under-reporting in 2011-2012.
Ofgem was notified of the error by Npower, and measures were taken to prevent the re-occurrence of this issue.
Adding to the list of Npower’s errors are incidents of abandoned calls, wherein consumers are either left on the phone indefinitely, or answer an abandoned or silent call.
Telecommunications watchdog Ofcom discovered that Npower made 1,756 calls of this nature to UK customers for seven weeks. The regulator imposed a £60,000 fine, while the firm compensated the affected customers with a £10 voucher.
Npower insisted that the thousands of abandoned calls were isolated exceptions and that it had measures in place to prevent such cases from happening.
Their call centres were using automated calling functions that allow them to contact multiple customers at once. However, this procedure has earned the ire of customers who picked up a call with no answer from the caller’s end.
The automated call system is not banned, but Ofcom warns companies that such practices should be employed carefully.
An Ofcom representative stated that the rules prevent consumers from getting frustrated or annoyed due to such calls, which is the reason why Npower was sanctioned with a fine. This move was made to ensure that firms take the rules seriously and avoid providing bad service to their customers.
Npower apologised for the breach in regulations and acknowledged the error exposed by Ofcom.