Friday, 1 October 2010

npower announcement: millions of pounds in customer refunds - advice to constituents

Dear Graham Jones MP

Today npower announced that it will make refunds to 1.8 million customers who overpaid for gas in 2007. Consumer Focus has worked closely with npower to make sure refunds are made fairly and that no one loses out.

In 2007 npower changed the way it applied its charges for the first block of higher-priced gas units which households pay, but this change was not communicated effectively to customers. An estimated 1.8 million customers are likely to have paid for more of these higher-priced units than they expected to pay for.

In February 2009, after an Ofgem investigation, npower repaid an average £6 to around 200,000 customers (£1.2 million). Consumer Focus and many customers thought this did not fully reimburse people for the overpayments made, and we have pursued further discussions with npower.

npower has now thoroughly reviewed its customers’ billing records, working closely with Consumer Focus, to ensure a fair amount is paid back. The average figure for those customers entitled to a refund is £35, with payments ranging from £1 up to around £100. The combined total for all affected customers will be £70 million comprising £63 million of payments for gas charges plus £3 million in VAT and £4 million in interest.

Advice to your constituents

Customers will not need to do anything to claim this refund. npower is writing to all affected customers over the next two months, offering payment that can be cashed at the Post Office. Consumer Focus would encourage customers to take advantage of these payments. If your constituents have further questions, or believe they may be entitled to a refund but have not been contacted by the end of November, they should call npower’s helpline on 0800 975 7938 from Monday 4 October. Answers to key questions can be found on the Consumer Focus website at:

Consumers have been waiting a long time for this announcement and we are pleased with the final result. We believe payment of £70 million is an excellent outcome for consumers and a major commitment from npower to its customers.

Kind Regards
Natalie Yelton
Public Affairs Advocate
020 7799 7988