UK gas billing bungle an opportunity

Incorrect gas bills in the UK could boost much needed switching and create competition and innovation in a stagnant industry.
Published: Thu 18 Aug 2016

Human error is to blame for the recent gas billing bungle in the UK, resulting in thousands of gas consumers over-paying and underpaying for the service for years in some instances. But, energy suppliers could turn this embarrassment into an opportunity depending on their responses to customers.

Meter confusion

Energy suppliers have been misreading meters and the problem came to light after one of the UK’s largest energy suppliers, E.ON discovered that it had overcharged several hundred of its customers. One customer paid too much for 15 years.

Regulators say that all of the big six suppliers are affected, as well as at least one independent company.

Apparently suppliers have been confusing old imperial gas meters, which measure consumption in cubic feet, with newer metric ones, which measure it in cubic metres. While the errors have benefited customers whose metric meters have been read as if they were imperial (some being undercharged by 60%), consumers whose imperial meters have been read as if they were newer metric ones have been overcharged by 130% and even more. Those who have been overcharged will be compensated individually and those who have been undercharged will not have to pay the difference back.

Ofgem, the energy regulator, has requested that all suppliers check their billing records to help establish the exact number of customers affected. The error is said to have affected about 0.04% of all 27 million customers in the UK, which amounts to more than 10,000.

Meters misreads embarrassing

A resulting inquiry by the UK’s energy regulator puts the industry back in the spotlight, just weeks after the UK’s competition watchdog warned that customers were paying £1.7 billion more than they should every year by not switching supplier. In June the Competition and Markets Authority ruled after a two-year probe that prices should be capped for customers on prepayment meters. [Modernising Britain’s energy market].

Similar errors have occurred occasionally in the past, but this is the first time they have been discovered on this scale. Several companies have been fined for inaccurate bills. For instance, Npower last year agreed to pay a record £26 mllion for billing problems affecting more than 500,000 customers between September 2013 and December 2014.

Nick Hunn, Engerati member and contributor gave Engerati his take on the error: “If they can’t even work out the difference between metric and imperial units, how on earth can anyone trust them to design and operate the world’s most complex smart metering system? It also illustrates that they have no current data analytics capability. Any decent billing software should have alerted them to these anomalies. If they haven’t worked out this basic level of data analysis, then the extra data they will get from smart meters will be wasted.”

Poor track record could spike switching numbers

While energy suppliers like E.ON and EnergyUK have already set up strategies and compensation schemes, advising customers that they need not take any action and that they will be in touch with them, we do wonder if this will encourage customers to be more attentive when it comes to billing and  proactive when it comes to shopping around for the best deals and quality service provision. We highlighted recently how the billing experience plays a key part of the customer life cycle and has a major influence on satisfaction and switching [Customer shock and the billing experience].

Ofgem agrees with this and has advised suppliers to respond quickly. Their spokesperson told Engerati:“When suppliers make mistakes it’s important that they put things right quickly, if they don’t they will lose customers through switching to a rival supplier.”

While Ofgem recommends that suppliers act quickly to avoid losing customers, they are also reminding consumers to shop around. Their spokesperson told advised: “We publish independent and authoritative data on energy suppliers performance on our website for consumers to compare. We encourage all consumers who want to get a better deal to shop around. For impartial advice on how to do this visit www.goenergyshopping.com

Because of the difficulty of tracking back over such long periods in some cases, we honestly doubt whether suppliers will tally up the figures accurately. We think consumers realise this too. With this in mind, we think  it’s going to come down to efficient and a more than satisfactory response to customers- a ‘bend over backwards’ response, if you will ! Suppliers have to now prove their competence going forward and rebuild customers’ trust.

Based on this analysis, we think the latest bungle is likely to encourage some much needed competition in the industry and it would be in the suppliers’ interest to deal with this billing issue as efficiently and honestly as possible to avoid a loss in customer numbers to fellow competitors.