Pyramid Comment

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Friday, June 19, 2009

Southern Electric - Deceit


Originally, Southern Electric responded positively to a letter I sent (13th December 2008). However, I have just received a statement proving that the company is deceitful and cannot be trusted.

The company lied to me

  • I have received a statement proving the deceit of the company and evidence that there was never any intention of playing fair. No quarterly statement was forthcoming and the level of direct debit was as threatened at £69 and not the 'agreed' figure of £54.
Several other activities have since been uncovered through a detailed analysis of invoices covering the previous 3 years.

The most notable is the varying statement periods year on year. This makes it difficult though not impossible to compare similar times throughout the year. The most blatant action that works against the consumer appears to be the doubling of the standard unit rate. This ensures that a decreased number of units are available for any discounted rate: interpreted as inflated and standard rates rather than standard and discounted.


Customer Liaison
Customer Service Centre
Southern Electric
PO Box 7506

Thank you for your letter (received: 01.07.09). The preliminary analysis of all my statements is now complete and I can make several observations and draw some conclusions. I do not regard myself as an isolated instance and I ask myself how many others have received ‘incorrect’ direct debit advice based on mistakes. It is difficult to imagine that such errors would pass unnoticed.

My review has taken a lot longer than I anticipated as obtaining much of the necessary information has required a great deal of 'digging', but does show the maximisation of revenue gain by Southern Electric (aka SSE) and the exploitation of colder and the coldest periods. Using electricity as an illustration the statement period for 10.06.08 -> 06.03.09 is 270 days and is split at 25.08.08 when price increases of 15% (standard) and 22.4% (discounted) were introduced for the remaining 194 days comprising of Autumn + Winter + Spring. Perversely, the discounted rate had the much greater increase. The coldest Winter period, after the increases, is effectively 'hidden' between Autumn and Spring as the two flanking colder periods. Between 10.06.08 -> 24.08.08 was the 76 day Summer period. Notably, a price reduction of just 7.5% and 8.7% (respectively) was introduced on 30.03.09 -> 08.06.09 (71 days) as temperatures began to rise. This illustrates the minimisation of revenue 'loss' (to SSE) through warm periods, also demonstrated in the previous year by the short warmest spell between 10.06.08 to 24.08.08 of just 70 days as the entire Summer period.

There is a fundamental difference between the gas and electricity charging structure. Gas has a single fixed limit [combined standard/discounted] of 1142 kWh regardless of the period duration, but electricity has both standard (225 units) and discounted (residue) revenue repeatedly even if the duration is combined into one statement. This can be illustrated by the electricity statement dated 10.06.08 -> 06.03.09. One statement, but two separate periods each with a standard proportion:

  • 10.06.08 -> 24.08.08 Standard = 186 units (70 days)
  • 25.08.08 -> 06.03.09 Standard = 477 units (194 days)

663 units and is approx. 3 x 225 units

For illustration, I offer the following:

Increase in unit charge (for entire colder + coldest periods)
  • 14.93p -> 17.18p = +15% (standard) 25.08.08 -> 29.03.09
  • 10.04p -> 12.29p = +22.4% (discounted) 25.08.08 -> 29.03.09

Decrease in unit charge (when warm period starts)
  • 17.18p -> 15.89p = -7.5% (standard) 30.03.09
  • 12.29p -> 11.22p = -8.7% (discounted) 30.03.09

The ‘arbitrary’ selection of charging periods may be effective policy, but is in my view managed in a very clumsy fashion. Altering statement periods into varying lengths and times of any year makes comparisons between those years difficult, but not impossible. Examination of all my data over more than 3-years (03.04.06 -> 08.06.09) reveals an apparent overcharge of £12.07 for gas supply during the period defined as between 30.05.08 and 26.11.08, a total of 181 days (the 87 days between 30.05.08 –> 24.08.08 and the 94 days from 25.08.08 –> 26.11.08). I cannot reconcile this as a ‘mistake’, if it is indeed a mistake, but can be revealed as follows:

30.05.08 – 24.08.08
  • 714 kWh @ 3.62p £25.84
  • 1236 kWh @ 2.56p £31.64
25.08.08 – 26.11.08
  • 1570 kWh @ 4.44p £69.71
  • 2719.55 kWh @ 3.37p £91.65
£218.84 –6% DD discount, +5% VAT -> £215.99

When corrected, this would become:

30.05.08 – 24.08.08
  • 714 kWh @ 3.62p £25.84
  • 1236 kWh @ 2.56p £31.64
25.08.08 – 26.11.08
  • 428 kWh @ 4.44p £19.00
  • 3861.55 kWh @ 3.37p £130.13
£206.61 –6% DD discount, +5% VAT -> £203.92

Alternatively, the same figure can be calculated:

  • £69.71 - £19.00 = £50.71
  • £130.91 - £91.65 = £38.48

Difference = £12.23

£12.23 -> £11.50 (-6% DD discount) -> £12.07 (+5% VAT)

Note: 714 kWh + 428 kWh = 1142 kWh and 3861.55 kWh = 2719.55 kWh + 1142 kWh.

The origin of the difference between £215.99 and £203.92 is £12.07 and represents a serious ‘error’ that cannot be viewed as an accident.

On the initial gas statement a total standard charge that carries the higher rate of charge was applied to the first 815 kWh, 351 kWh (03.04.06-30.04.06) + 464 kWh (01.05.06 – 06.06.06). Subsequent demands are for either 1142 kWh or 1143 kWh and this represent a 40% volume increase in the standard proportion. My interpretation of this is that the first bill creates a lower charge as an introductory "sweetener". During the latter half of 2008 the "hidden" overcharge is buried halfway through the statement period 30.05.08 - 26.11.08 (fourth quarter) when energy price increases were applied. Standard rate is a 22.65% increase and the discounted rate is a 31.6% increase (25.08.08).

Other price changes have occurred also in the later part of a statement period such as onwards from 01.01.07 resulting in a higher charge being applied during a heavy-usage period. There would appear to be a definite pattern with respect to statement timing and the apparent arbitrary nature of varying statement periods that never benefit the consumer. It also appears that imminent price changes, both up and down, must be known to SSE well in advance.

Unless a satisfactory justification can be made, the apparent overcharge (applied during the 6-month period 30.05.08 - 26.11.08) must be either returned or credited. I make note of the fact that energy consumption has no direct link to price increases or decreases. The one is not dependent on the other and I am currently closely monitoring for accurate comparison with future 3-month statements for a more consistent set of figures. Finally, the reduced direct debit discount of 6% to 5% was unannounced additionally disadvantaging the consumer and benefiting SSE.

These points require answer and I ask you to be accurate, as your response may be enclosed with my communication to my MP and Ofgem.

Yours faithfully,

  • Defense: the statement that covers several months also incorporates two invoices onto the one statement. Consequently, the double charge appears to be valid although this is not mentioned or clarified in any way. No attempt at all was made. Another deficit of multiple invoices on one piece of paper (to save the environment) without explanation. This just has the advantage of misleading and hiding the facts.
  • The £12.07 was credited on the grounds that an error (mine) had allowed misinterpretation of the figures.
Note: these details are added here to ensure the history is recorded in full.