Posts tagged "SSE"

Bumper SSE results expected to provoke consumer outrage

Scottish & Southern Energy predicted to announce profits of up to £1.4bn at a time when many are struggling to pay their bills

Accusations that the big energy firms are profiteering at the expense of UK households will be centre stage again on Wednesday if Scottish & Southern Energy, as expected, reveals bumper profits for a second year running.

Analysts are predicting the Perth-based company, which supplies 9.6m households with gas and electricity, could announce profits as high as £1.4bn for the last 12 months – a 5% rise on the previous year.

News of further big profits at SSE, which has been hit by a mis-selling scandal this year that saw it fined a record £10.5m in April, will cause further outrage among fuel poverty campaigners and householders struggling to pay their bills.

It will also heap more pressure on both the government and Ofgem, who have been accused of standing by as the big six suppliers profit at their customers’ expense.

Last October SSE raised domestic energy prices by 9% to coincide with the start of the coldest and longest winter of recent years. A few weeks later it revealed that it had made £397.5m in the six months to the end of September, compared with £287.4m in the previous year – a 38% increase for that period.

SSE is not alone in announcing startling results. National Grid recently posted a £2.7bn profit on revenues of £14.4bn – a margin of about 19%. British Gas said an increase in gas usage of 18% in the first four months of 2013 due to very cold weather had helped its figures. Its parent company, Centrica, is on target to post full-year earnings of £1.4bn, prompting the Fuel Poverty Action group to target the companies recent AGM with its Stop the Great Fuel Robbery campaign.

Mark Todd, director at price comparison service, energyhelpline, said the profits at National Grid needed to be addressed by the government. “This is the kind of margin normally associated with successful high-risk activities, not with running a low-risk infrastructure businesses that have a captive market. The attention really must turn to how consumers can get a better deal from the energy market.”

He said typical household gas prices have risen 173% over the last 10 years and warned that despite the much publicised Downing St summits, only a few million homes are on the best deal possible, with over 20m household still overpaying.

Elizabeth Ziga, of the Fuel Poverty Action group, said: “While SSE customers were skipping meals to keep the heating on, the company continued to rake in bumper profits. To end this chilling profiteering, we have to break the big six’s grip over our energy.”

Last week the Department for Energy and Climate Change warned there were 4.5 million people in fuel poverty in 2011. Since then, campaigners have warned, their number will have risen as prices and consumption have jumped this winter. Many household have still had their heating on this week.

Meanwhile, Wednesday’s results at SSE will include the latest numbers on compensation for mis-selling. In April the regulator Ofgem cited a “woeful catalogue of failures by the SSE management” that led to years of mis-selling over the phone, in stores and on customers’ doorsteps. SSE stopped door-to-door sales in 2011, but such practices persisted in its other sales channels until September 2012.

SSE faces Ofgem’s largest fine ever of £10.5m fine for mis-selling

Energy supplier used ‘misleading scripts’ and failed to give ‘accurate estimates and comparisons to customers’

The activities of large energy suppliers were under the spotlight again on Friday when Ofgem, the industry regulator, confirmed that it would levy a £10.5m fine on SSE for mis-selling.

The penalty, the largest the watchdog has imposed, was levied for numerous breaches of SSE’s obligations relating to telephone, in-store and doorstep sales activities.

It is the second time in less than two years that the utility has been found guilty of misleading customers on the doorstep and comes just 48 hours after Ofgem announced it was investigating SSE and five other suppliers about their failure to meet energy efficiency targets.

In the latest mis-selling case the contraventions involved “the use of misleading scripts” by both telesales agents, while also failing to give “accurate estimates and comparisons to customers”.

SSE said it had “nothing further to say” about the fine but confirmed it would pay up by the 17 July deadline.

When the penalty was first proposed earlier this month, the company said it was “deeply regretful that breaches occurred and apologises unreservedly to any customers”.

SSE pointed out that a large number of the breaches referred to activity undertaken between October 2009 and July 2011 – the point at which SSE suspended its doorstep sales operations in Britain.

But the Ofgem confirmation notice also made reference to the fact that in May 2011 SSE was found guilty of “misleading commercial practice” in relation to doorstep-selling activities between 2008 and 2009.

SSE, British Gas and Scottish Power are among six energy companies that are to become the subject of an investigation by Ofgem into their failure to reach UK carbon reduction targets.

British Gas could face a large fine after missing one target by nearly 40%.

Meanwhile another of the big six energy companies, npower, is facing the threat of a consumer boycott. More than 170,000 people have now signed a petition calling on the German-owned business to pay more tax in Britain.

Ofgem to investigate energy firms for missing home efficiency targets

Regulator to look at why British Gas, SSE and Scottish Power failed to reach carbon reduction targets

British Gas, SSE and Scottish Power are among six energy firms to be investigated by the energy regulator Ofgem after failing to deliver enough energy efficiency measures to UK households.

Under the Carbon Emissions Reduction Target (Cert), legislation which was in place until the end of 2012, the big six energy companies had to introduce measures such as installing insulation or switching a household’s heating fuel from oil to gas to help reduce UK carbon emissions.

Under a separate smaller scheme, the Community Energy Saving Programme (CESP), the same suppliers had to deliver more complex energy saving measures to people in the most deprived areas of the country.

Both British Gas and SSE failed to meet their targets under either scheme, according to Ofgem, and Scottish Power missed its CESP target. Electricity generation companies GDF Suez/IPM and Intergen also missed both targets.

E.ON, EDF Energy and npower, meanwhile, all met their obligations under both targets.

Sarah Harrison, Ofgem’s senior partner in charge of enforcement, said: “At a time of rising energy bills energy efficiency can make a big difference for consumers. The fact that the industry has delivered 99% of its government energy efficiency targets is to be welcomed.

“However, Ofgem’s role is to ensure that consumers do not lose out by the failure of firms to deliver all the help required, or are not disadvantaged by late delivery. This is why Ofgem is today launching investigations into six firms who have failed one or more of their energy efficiency targets set by government.”

Once it has investigated why the companies missed their targets, the regulator can drop the case, fine them or come to a settlement agreement.

British Gas is potentially in the most trouble as it missed its Cert target by 2% and its CESP target by almost 40%. SSE also missed its Cert target, but this appears to be because it was late in filing its final figures to Ofgem – those figures, now submitted, show it was on target. But it missed its CESP target by 10%.

British Gas had made a final push to meet its Cert obligations at the end of 2012 by offering free loft and cavity wall insulation to customers of any energy firm. However, today’s Ofgem figures show its missed its insulation target under Cert by 5%.

Since the end of 2012 some energy companies, including SSE, have continued to offer free or discounted energy efficiency measures to households. Ofgem said it will take these into account when investigating the companies, but that these would not be a substitute for compliance.

The investigation into SSE opens another chapter in a bad year for the supplier. Last month it was fined a record £10.5m by Ofgem for “prolonged and extensive” mis-selling to customers.

All the big six energy suppliers have been accused of “cold-blooded profiteering” after official figures showed they had more than doubled their retail profit margins over the past 18 months and were now earning an average of £95 profit per household on dual fuel bills.

Money Talks: Isa deadline, SSE compensation, and cutting the cost of train travel

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The end of the tax year is looming and it’s time to make sure you’ve made the most of your annual Isa allowance. You’re cutting it fine if you haven’t, but some providers are accepting applications right up until midnight on Friday. We have a round up of Isa deadlines, plus guides to choosing the right account – whether you want to go for a cash Isa or a stocks and shares Isa. Just don’t spend too long deciding …

Customers of energy firm SSE may be entitled to compensation after the regulator Ofgem uncovered evidence of “prolonged and extensive” mis-selling. Lisa Bachelor has put together a guide to getting your money back.

Never pay over the odds for train tickets again: watch Patrick Collinson’s video guide to cutting the cost of rail travel. As well as our own tips, readers have shared their money-saving hints in the comments section below the line.

Also on the site this week

• Anna Tims looks at what £250,000 will buy you around the UK.

• Work agony uncle Jeremy Bullmore answers readers’ employment dilemmas.

• Get information and guides to help you at different life stages using our interactive Life Navigator tool.

Daft deals

D’oh! this deal at Sainsbury’s is just nuts. Thanks to Matthew Sherrington, who spotted it in Southwark.

We would love to hear from you if you have seen similar silly signs. Send your pictures to money@guardian.co.uk. The best will be in Saturday’s Guardian Money section.

Real deals

• How might the budget affect your plans for retirement? Find out with a free report from Galvan Research & Trading.

• You have until midnight on Friday 5 April to stash away up to £5,640 in a cash Isa. Compare best buys and open your account online.

That’s all this week, thanks for reading.

Hilary Osborne, editor guardian.co.uk/money

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Energy mis-selling: hot – and very bothered

Another investigation finds that members of the public have been told bare-faced lies by an energy firm touting for custom

When even the energy regulator accuses one of the companies under its supervision of a “woeful catalogue of failures”, it’s worth paying heed. And Ofgem is right: its report of how tens of thousands of customers were fleeced by SSE, formerly known as Scottish and Southern Energy, over years, in shops, on their phones, or on their very doorsteps does make for depressing – and depressingly familiar – reading. SSE has been investigated over its selling methods before, and last May was fined £1.5m by Ofgem. Nor is it the only one: last year EDF was ordered to pay £4.5m back to customers, and investigations into npower and Scottish Power are continuing. But here we go again: yet another investigation which finds that members of the public have been told bare-faced lies by an energy firm touting for custom.

Take this script, used by door-to-door sales people in the north of England: “What I’m here to do today is show you a government thing called deregulation which results in your energy prices being lowered by doing nothing at all.” A short sentence which, as the watchdog observes, tells two big lies: deregulation doesn’t necessarily lower prices, and it’s impossible to cut your bills by doing nothing at all. Then there’s the less elaborate false promises: the claims that an SSE tariff was cheaper than a competitor’s, even though it was more expensive; the fibs told during sales calls. These aren’t one-off mistakes, they are indicative of a culture of ripping off customers. The most shocking part of the Ofgem report is its revelation that the main auditors of doorstep sales took a commission on sales “and therefore had a financial interest in not reporting misbehaviour”.

To be clear, the problem is not SSE’s alone – nor is it recent. As the review states, how gas and electricity are sold to customers “has been a source of concern to Ofgem for a number of years”. The one thing that makes the SSE case exceptional is the size of the fine, the largest handed out to date. But big as it sounds, £10.5m it will barely trouble a company whose gross profit last year was £2.25bn. None of SSE’s top executive team have resigned, while bonuses have only been squeezed.

When Margaret Thatcher began privatising the utilities market, she declared it part of an age of popular capitalism. A quarter of a century later, what we’ve ended up with is unpopular capitalism: a giant market divvied up between six big companies, all arguably profiting from their proliferation of tariffs and opaque pricing structures. And as Ofgem points out, trust between the customer and the supplier is repeatedly breached. Mere fines and reports are not going to sort this mess out. Greater transparency may help, but best of all would be breaking up our energy oligopoly.

Ofgem announces record fine for energy supplier SSE – video

A senior partner in Ofgem announces the regulator is fining energy provider SSE £10.56m, the biggest penalty ever imposed on an energy company

SSE customer compensation: key questions answered

After Ofgem imposed a £10.5m fine and urged users of the energy company to contact the firm, we answer your questions

The utility firm SSE has been fined £10.5m for “prolonged and extensive” mis-selling in what is the largest ever penalty imposed on an energy provider. Here we find out what will happen to customers who were mis-sold policies.

Am I entitled to compensation from SSE?

Energy regulator Ofgem says that “upwards of 20,000 people” are entitled to compensation. This could include you if you were sold a policy on the doorstep, via telephone or in-store, and have any reason to believe that what you were told by the sales agent is not true.

I have an energy policy with Marks & Spencer, which uses SSE as its supplier. Could I be affected?

Yes you could. The in-store policies Ofgem refers to were those sold within M&S stores by SSE agents. The policies will have been taken out as M&S Energy policies. Another company, Ebico, uses SSE as its supplier but Ofgem says its customers were not affected by the mis-selling.

How do I know if I was mis-sold the policy?

Examples cited by Ofgem include SSE staff telling some customers that they would save money when in fact they were switched on to a more expensive contract, telling people that by switching to SSE they would be getting the full reductions they’re entitled to “just like the government intended”, and claiming that other suppliers were putting their prices up, or that other suppliers’ price increases were higher than they actually were. The mis-selling activity Ofgem has been fined for took place mainly between October 2009 and July 2011 but you should still claim if you think you have been mis-sold a policy since.

How do I claim?

You need to call SSE on its dedicated claims line: 0800 975 3341

Do I need paperwork to back up my claim?

It will help as you will be asked for details of your account, but SSE should be able to trace your account anyway so long as you can provide the right postcode.

SSE has already proactively contacted my neighbour. Why hasn’t it contacted me?

While investigations were taking place, SSE set aside a £5m fund to compensate customers. This has been available since the end of 2011. It says it has sent more than 970,000 letters to existing customers that it thinks it may have mis-sold energy contracts to. Of these, 6,500 have successfully claimed compensation totalling £400,000. SSE claims that the letters it has sent should cover the majority of people who are entitled to compensation. However it admits that most of these relate to doorstep selling. The new Ofgem fine covers other types of mis-selling – both in-store and over the phone. So you may not have been contacted.

Even if SSE has written to you, you may well have missed the letter or assumed it was marketing material as it was headed: Our Sales Guarantee – Please do not ignore this letter, it contains important information.

How much am I entitled to?

SSE says claims are being worked out on a “case by case basis”. If you take the compensation payouts so far as a guide, 6,500 people who have claimed £400,000 between them works out at a typical £61.50 each.

When assessing a claim, SSE says it will take into consideration what tariff you were on, what you switched to and what your energy usage was during that time. It will then work out whether you suffered any financial loss over that period. Its says the methodology used to do this has been “independently assessed and approved”.

It says its aim is to then “make good any loss”. In other words, to put you back in the position you would have been in had it not charged you extra by mis-selling to you. It will not provide you with a goodwill gesture or any additional cash, though it does “retain the ability to do this” in extreme cases.

People who are still customers will get a credit to their account. Those who have moved away will get a cheque.

How long will I have to wait for my money?

Advisers on SSE’s claims line are telling people they will be informed of a decision on their claim in two weeks’ time. The assessor will ask you for details of your policy and also what has made you put in a claim: did you feel you were overpaying before the fine, for example.

What if I’m not happy with SSE’s decision?

You can still complain to the energy ombudsman. You can also do this if you believe you were mis-sold a policy before 2009.

Why isn’t SSE paying any of its £10.5m fine to its customers?

Ofgem lacks the powers to make companies pay compensation to customers. Thankfully this should change once the energy bill is enforced as it contains powers of redress for Ofgem.

Ofgem has in the past come to an agreement with an energy company about a form of redress. In 2012, EDF was fined £4.5m for mis-selling by the regulator. Instead of this going to the Treasury, the firm was fined £1, a statutory obligation on the part of Ofgem, and distributed £3.5m to customers who receive its Warm Homes Discount, and donated £1m to Citizen’s Advice.

SSE and Ofgem disagree on whether that was an option for SSE. The firm claims it wasn’t but Ofgem says it was not able to reach an agreement with SSE to pay redress because SSE “contested every single breach” the watchdog identified during its investigation.

SSE fined record £10.5m by Ofgem

Utility giant gave ‘misleading and unsubstantiated statements’ to potential customers about prices and savings, says watchdog.

Utility giant SSE is to be fined £10.5m for “prolonged and extensive” mis-selling in what will be the largest ever penalty imposed on an energy provider.

Energy watchdog Ofgem said it found “failures at every stage of the sales process” across SSE’s telephone, in-store and doorstep selling activities.

SSE provided “misleading and unsubstantiated statements” to potential customers about prices and savings that could be made by switching to SSE, according to Ofgem.

Ofgem said the level of the fine reflects the seriousness and the duration of the mis-selling, as well as the harm caused to customers and the likely gain to SSE.

Management at SSE – one of Britain’s “big six” energy suppliers – failed to pay enough attention to compliance, which allowed the mis-selling to take place, added Ofgem.

Ian Marlee, the managing director for markets at Ofgem, told the BBC Radio 4 Today programme: “This is a woeful catalogue of failures by the SSE management.

“This fine represents the fact that what they were doing was allowing a culture of mis-selling to continue, they weren’t doing enough to prevent sharp selling practices from their selling agents, they actually provided misleading sales scripts.

“Some people were being told they were going to get savings when actually they were being put on a worse deal. People were expecting savings and were not getting the levels of savings, people were being told direct debit levels that made it sound like they were going to be better off when in fact they were worse off.

“What we need and what we expect from energy companies is they have a culture of putting consumers first and complying with the rules.

“Clearly SSE management were not doing that which is why we imposed the largest fine on energy suppliers we have ever imposed.”

The fine will be paid to the Treasury, Marlee said.

Energy company SSE’s profits surge by nearly 40% weeks after 9% rise in bills

Energy firm behind Southern Electric, Swalec and Scottish Hydro says £398m half-year profit needed to ‘keep the lights on’

SSE, the energy company behind Southern Electric, Swalec and Scottish Hydro, has revealed a leap in profits of almost 40%, just a month after announcing a 9% increase in bills.

The UK’s second-largest generator of electricity said its £398m half-year profit was necessary to “make investments that keep the lights on”. However, consumer groups, and even rival energy providers, questioned the scale of the increase.

Richard Lloyd, executive director of Which? consumer magazine, said it bolstered the case for an independent review of gas and electricity charges.

“Without greater scrutiny of energy prices, consumers simply will not believe that they’re getting a good deal,” he said.

Meanwhile, the Co-op’s fledgling energy business warned that the SSE results would further alienate customers. “Announcements of huge profit increases for shareholders do nothing to help the tarnished image of UK energy industry or get to grips with consumer concerns,” said Nigel Mason, of Co-operative Energy. “This profit announcement off the back off a 9% bill increase will be a bitter pill for SSE customers to swallow.”

SSE announced a 5% increase in its payout to shareholders. The company’s 9% price rise last month hit 5 million electricity customers and 3.4 million gas customers.

The big six energy companies, which include SSE, are trying to distance themselves from the furore over alleged gas price manipulation.

Ian Marchant, SSE’s chief executive, said he was keen to know whether the wholesale market had been rigged or not. “If there is evidence of manipulation I want to know as much as anyone else, as I buy gas for our customers and I want to know if we’ve been affected and whether our customers have been affected.”

SSE has said it participates in the energy market in a “fair and legitimate way”.

Scottish Power has distanced itself from the allegations by saying it was definitely not involved in any of the gas trades under particular scrutiny by the Financial Services Authority. “No day-ahead gas trades were executed by Scottish Power on 28 September,” it said.

EDF said it was confident that all of its trading activities were fully compliant with market rules in the UK. It added: “EDF Energy and EDF Trading can also say that they were not involved in the alleged activities on 28 September reported in the Guardian newspaper.”

A statement from Centrica said: “Centrica participates actively in the UK wholesale gas market in order to meet our commitments to our customers. We trade in the wholesale gas market every day. In this respect, 28 September 2012 was no different.

“We have reviewed all our trades executed around the close of the market on that day and have found nothing unusual about them or any cause for concern.”Unite, Britain’s biggest union, branded SSE’s profits “excessive” and blamed the government for failing to effectively control the industry.

Kevin Coyne, Unite national officer for energy, said: “These profits are excessive, especially when price increases have caused more hardship for those customers already struggling to get by.

“The government has washed its hands of all responsibility and left it to the market, which is clearly failing to deliver on price. This Tory government stubbornly refuses to properly regulate the energy industry.”

EDF raises gas and electricity prices by 11%

EDF is fifth of the ‘big six’ providers to announce a price rise – the highest of all the firms so far

EDF Energy has announced price rises of almost 11% for its 3 million gas and electricity customers that will come into effect just before Christmas.

The 10.8% average rise, which will be introduced on 7 December, is the highest imposed by any energy company this year, and follows announcements from British Gas, npower, Scottish Power and SSE in the past few weeks. It also comes at the end of the Big Energy Saving Week, a national initiative designed to educate people about how to cut energy bills.

The company blamed the price rise on a combination of “significant extra costs in the use of gas and electricity networks, mandatory energy efficiency and social schemes, plus the rising price of wholesale energy.”

“We know customers will not welcome this news and do not want to see prices going up,” said Martin Lawrence, managing director of energy sourcing and customer supply. “Our new prices will, however, be cheaper on average than those of all the other major suppliers which have announced standard price rises so far this autumn.”

On 15 October Scottish Power raised its prices by up to 8.7% following rises of 9% by npower and 6% by British Gas the previous week. SSE put up its prices by 9% in August.

Of the “big six” firms, only E.ON has yet to increase prices, although it is widely expected to do so shortly. The company has promised a price freeze until 2013 so any changes wouldn’t happen until then.

Ann Robinson, director of consumer policy at uSwitch.com, said the price rise is “the final hammer blow” for energy customers this side of Christmas. “Consumers now face a winter of rationing their energy usage – many will be forced to turn their heating down or off for fear of the impact of these hikes,” she said.

Clare Francis, consumer finance expert at moneysupermarket.com, said: “Customers need to keep on their toes to try and beat rising bills. The longer, colder nights are drawing in, encouraging people to crank up the thermostat. Any customers languishing on their provider’s standard tariff should act now to ensure they switch on to the best deal.”

Downing Street described the latest price rises as “very disappointing”. A Number 10 spokeswoman said: “It is up to energy suppliers to explain their prices to their customers. While we can’t control world energy prices, we have been working very closely with the energy companies to make it easier for people to switch to find cheaper deals.

“We want to ensure customers get the lowest tariffs. That is why we are going to use the law to help people get the best deals.”

Citizen’s Advice issued research earlier this week that showed many people are living in colder homes than they would like: 62% don’t have the heating on as much as previously, and 18% are not using some rooms in their home in a bid to cut their bills. It is using Big Energy Saving Week to encourage people to switch provider.

Tomorrow, London pensioners will descend on the Westfield Stratford shopping centre in the east of the capital to protest against fuel poverty.

Elizabeth Ziga of Fuel Poverty Action, the group that has organised the protest, said: “‘People are fed up with our energy being produced to line the pockets of the ‘big six’ while we’re left to suffer mammoth fuel bills and escalating climate change. Saturday’s protest, led by pensioners, will be the first of many. Expect a winter of resistance.”