Southern Electric - The Letter

Southern Electric is a trading name of the Scottish and Southern Energy Group of which SSE Energy Supply Limited is a member

Note added: 19.06.2009

• The 'Note added' (copied below) is UNTRUE. The communication was a lie. The amount taken from my account was the original £69. I had taken Southern Electric at its word, but this has been demonstrated to be worthless.
  

Note added: 03.01.2009

• To it's credit Southern Electric has responded positively to this issue which has been resolved and the suggested £54 accepted. The original quarterly billing has been restored. No detail was provided in the response, but it was satisfactory.
  

Southern Electric

13th December 2008

Customer Accounts
Southern Electric
PO Box 7506
PERTH
PHI3QR
Scotland

• Direct Debit payment of £69.00 is unacceptable

• Direct Debit payment of £54.00 is reasonable

My justification for the lower reasonable and 'fairer' amount is discussed further below, but I am very disappointed at the method used by Southern Electric (Home - the business) to reach the value and the extremely weak justification given for an increase to my monthly direct debit of almost 82% (£38 -> £69). I am not impressed by the review and a reassessment is required. I have lost considerable faith in the probity of Southern Electric as any meaningful adjustment could be made sometime in the near future when accurate figures will be available.

A 6-monthly statement is totally unacceptable and associating bill estimation with environmental concerns is wrong since the one has nothing to do with the other. Seasonal change in consumption is effectively hidden and it becomes almost impossible to determine a use-pattern. You do not inform me of how my account debt is moving and I must do this myself. The maximum information that can be mined in the current statement is the total consumption for the two 3-month periods 30th May 2008 through to 24th August 2008 and 25th August to 26 November 2008. This will become impossible in the 6-month statement. If the minimum of monthly usage were to be effectively hidden, I would regard this as a deliberate attempt to prevent the consumer from checking the consumption detail. Southern Electric could easily provide this information if it so desired.

This is exemplified by the apparent quantum jump in consumption during 2008: the 3-month period of 30th May to end 24th August suddenly jumps from 1950kWh to 4289.55kWh for the subsequent quarter (26th August to 26th November). This is unrealistic and should reflect the gradual increase in consumption from October through to November. This must be assumption since no detail is available to monitor monthly change.

The level of consumption towards end November (heaviest use) is then used to gauge the estimated consumption for the 11-month year in 2009.

• The Southern Electric definition of a year comprises 11-payments

This means that Southern Electric enjoys the highest payment in the period of least use:

Winter rate during the Summer

This is unfair and, quite frankly, immoral. Doubtless, the predictable accrual of an inflated credit surplus will be repaid (interest excluded) at a future date. This amounts to quite a considerable financial advantage to Southern Electric. The claim "Your gas statement explained" does nothing more than confuse. The detail can be worked out and the usable information for 2008 can be unravelled though it has been made difficult, but not impossible. Southern Electric has forced scrutiny of these figures by the outrageous DD payment that has been proposed and some interesting features have arisen as a result.

The period from 30th May to 24th August uses the tariff before the price rise that applies from 25th August to 26th November. The percentage increase can be calculated for both the Standard energy and Discounted energy parts and is respectively:

3.620p/Unit ->4.440p/Unit = 41.4%
2.56p/Unit -> 3.370p/Unit = 31.8%

The proportion of Standard energy and Discounted energy is easily calculated:

714 kWh @ 3.620p/Unit (Standard energy) = 36.6% (£25.84)
1236 kWh @ 2.56p/Unit (Discounted energy) = 63.4% (£31.64)

yielding the total of 1950 kWh

rising to

1570 kWh @ 4.440p/Unit (Standard energy) = 36.6% (£69.70)
2719.55 kWh @ 3.370p/Unit (Discounted energy) = 63.4% (£91.65)

yielding the total of 4289.55 kWh

• Total for the 6-month period: 6239.55kWh (£218.83) and less the 6% DD discount gives

£205.71

These figures are mined from your own statement and therefore cannot be disputed.

To yield an approximation of seasonal use for the following two quarters (6-months), these quantities should be reversed:

December (2008) -> Feb (2009) = 3 months

• 4289.55 x 36.6% = 1570 @ 4.44p/Unit = £69.70
• 4289.55 x 63.4% = 2719.55 @ 3.37/Unit = £91.64

March (2009) -> May (2009) = 3 months

• 1950 x 36.6% = 714 @ 4.44p/Unit = £31.70
• 1950 x 63.4% = 1236 @ 3.37p/Unit = £41.65

The total consumption for the period December (2008) -> May (2009) is estimated at 6239.55 kWh -> £220.60 (after 6% DD discount). Consequently, the predicted consumption over the 12-month period from December (2008) -> November (2009) = 6239.55 x 2 = 12479.1 kWh

£220.60 + £220.60 = £441.40 and with 5% (VAT) ->

£463.47

This falls well short (by £240.17) of the

£703.64

calculated by Southern Electric:

• £203 + £509.91 = £712.91
• -> £670.14 (less 6% DD discount)
• -> £703.64 (+5%VAT)

The price of gas is not under my control, but my usage of that gas certainly is. Yet, Southern Electric reaches a figure of 20,702.78kWh (4572.00 + 15130.78) for the following 12-month period. My estimate of 12479.1 kWh is at odds with the Southern Electric calculation. However, careful examination of the quantities involved demonstrates some apparent massaging of the figures.

Considering the proportion of Standard energy and Discounted energy the calculation of estimated consumption is clearly wrong. 4572.00kWh Standard energy (36.6%) equates to a Discounted energy (63.4%) proportion of 63.4/36.6 x 4572 (36.6%) = 7919.8 (63.4%). The quantity (202702.78 - 4572) = 121.13% as Discounted energy. This totals 12491.8kWh and is very close to my own estimate of 12479.1kWh. This amounts to a massive

65.9% over estimate

by Southern Electric of my predicted consumption and is clearly absurd. There is no reason to presuppose such a large rise in the volume of my gas consumption. Any movement should be downwards and not upwards.

• How is there such disparity (12479.1kWh and 20702.78kWh) between the two figures? The Southern Electric calculation has almost double (1.91) the Discounted energy that it should be according to the Southern Electric proportion formula.

Notably, the current Direct Debit of £38.0 resulted in a 17.2% decrease in the amount carried forward as a debit from the previous statement. This is specified as

£69.80 -> £57.79 = -£12.01

The shortfall amounts to around an averaged £9.00/month (£57.79/6). Southern Electric calculates the charge into 2009 using an 11-month year and this I do not understand. It does have the benefit to Southern Electric of raising the Direct Debit from £63 -> £69 every month:

£761.44/12 = £63
£761.44/11 = £69

The estimated usage is very confused and confusing and appears to misrepresent the situation. The concept of the 6-monthly statement creates an extra level of difficulty in the assessment of any consumer's bill and this letter states my objection to this. It would be a straightforward task for Southern Electric to detail monthly usage on a 6-monthly statement of account. A proper analysis of consumption is then possible.

These figures present my direct challenge to Southern Electric for comment. An acceptable remedy would obviously be to simply increase the Direct Debit by no more than

£16 (£38 -> £54.0 = 42%)

which takes into account the highest actual increase of 41.4% and even this is a gross overestimate.

The proposed increase to £69 is strongly challenged and explained in this letter.

I have enclosed a cheque with this letter to clear the debt of £57.79.

Please be accurate in your explanation.

Yours faithfully,