Phantom debts that have come to haunt energy customers

Last month Michael Jennings received a text and a final statement, both on the same day, informing him that his dual-fuel account was in the red. The statement bore the logo, livery and customer services hotline of Extra Energy, which had supplied his home since 2016. The alarming thing was that Extra Energy ceased trading last November and the pensioner, along with its other customers, had been transferred to Scottish Power. Moreover the charges, which covered a one-month period between October and November 2018, amounted to £2,919.12.

Jennings called customer services and discovered that the alleged debt was based on an estimated reading and was told that none of the actual readings provided over the years could be retrieved. He then contacted Scottish Power, which confirmed that his account had a zero balance when it was transferred last year.

Nevertheless, the phantom Extra Energy insisted its figures were correct. “I was told I had three choices: to pay in full immediately, to pay over three months or to await a collection agency,” he says.

“When I requested a bill, the South African operative asked for my first name twice. When I checked the number online I found that it is attributable to a number of scams. I have always paid £80 per month by direct debit and fail to understand how this alleged figure could have been reached in a single month.”

Jennings feared that the demand was an attempt to defraud him and contacted the Observer. Depressingly, it turns out that he is not the victim of a scam, but of a similarly damaging incompetence.

The final statement had been issued by Extra Energy’s administrator, PricewaterhouseCoopers (PwC), although only a paragraph of tiny print on the final statement explains this.

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Only when the Observer requested a breakdown of the sum did PwC admit that the debt had accrued due to “a history of under-billing” by Extra Energy, despite regular meter readings having been submitted. When we pointed out that customers can’t be charged for more than 12 months of arrears if they have not been billed, PwC slashed his balance to £1,132.00.

In the wake of Extra Energy’s collapse, its 108,000 domestic customers were promised that they would receive final statements by September 2019, leaving them exposed to shock bills for up to 10 months. To meet that deadline PwC appears to have issued demands without adequate evidence.

Asked by the Observer whether it first checked customers’ billing histories and meter readings, it implied it had inherited a shambles from the defunct supplier. “We have encountered issues with customer data and billing systems that could not have been reasonably foreseen,” it says. “We are in the process of coordinating the complex process of final billing.”

Hundreds more Extra Energy customers have received unexplained three- and four-figure bills months after the company ceased trading and many, who were never customers, claim to have been contacted over phantom debts.

One woman, who had omitted to cancel her direct debit, was left unable to pay her mortgage when £540 was taken from her account seven months after the supplier went into administration. Some have been threatened with debt collectors, while others are still waiting for a credit on their accounts to be refunded.

MoneySavingExpert, the consumer forum, says it received scores of complaints in April when the first bills started to land.

“A number of former customers were unexpectedly told by PricewaterhouseCoopers that they owed cash and others, who claimed they were never customers of the firm, said they were also chased,” says Steve Nowottny from the website.

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“We told those affected that they shouldn’t just ignore the letter, even if they believe they didn’t owe money, since some did owe cash. Those who believed they were being wrongly chased were urged to get in touch with PwC as soon as possible to dispute the claim and present whatever evidence they could showing they’d paid money owed.”

Utilities regulator Ofgem acknowledges that customers have been poorly treated. “Ofgem’s role is to appoint a supplier of last resort and ensure a smooth customer transfer. We do not appoint the administrator,” it says. “Unfortunately, in the case of Extra Energy customers, we have had to engage very closely with PwC as we are aware of high levels of complaints.

“We’re extremely disappointed that Extra Energy customers have had to wait so long to receive final bills and we are aware of some customers disagreeing with the final amount. We have called on PwC and Scottish Power to work together to resolve this as quickly as possible. We have also been clear that customers with debt should be handled sensitively, and asked that PwC gives due regard to our supply licence rules on debt collection.”

Scottish Power, which is responsible for refunding credit owed to customers inherited from Extra Energy, declined to comment on complaints about PwC but says that it is close to completing the refunds.

PwC advises those who dispute or query their bills to call its customer service line included on the final statements. But, as Jennings found, its agents may be unable to fish the facts out of the quagmire that is Extra Energy’s database.

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Moreover, many may be put off by the fact that the number is rated “dangerous” on website, Who Called Me. Comments on the site report long periods on hold or calls cutting off and contributors complain of being harassed by South African call centres with inadequate or out-of-date details.

Dismayingly, if the administrator does not budge on its demands the options are limited. Administrators such as PwC are not bound by Ofgem’s regulations, because they are not an energy company and, for the same reason the energy ombudsman is powerless.

“Unfortunately, we cannot investigate complaints about administrators, as these companies fall outside our remit,” it says. “Similarly, we cannot require action of an energy supplier once it ceases trading.”

Customers who feel that PwC has not adequately handled a formal complaint can escalate it through the Insolvency Service’s online gateway. A small claims court is the last resort but customers would have to produce old bills and other evidence to show their final statement is unreliable.

This month Ofgem will publish the results of a consultation on new measures to safeguard customers when a supplier goes bust. This follows complaints that those with a defunct company have been moved on to higher tariffs with their new supplier, or aggressively pursued by debt collectors acting for the supplier’s administrators.

Extra Energy was one of 10 companies to cease trading within 12 months and in June the regulator introduced new tests to ensure companies applying for a licence to supply energy have sufficient funds and customer service infrastructure.



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