Episode 2 Rip Off Britain

We asked you to tell us who's left you feeling ripped off.

I think this is very, very, very wrong for what they have done.

The bank piles charges upon charges upon charges.

Legally, it was right.

Morally, that's where the question of doubt comes in my view.

And you contacted us in your thousands, by post, email,

even stopping us in the street.

And the message could not be clearer.

You don't get a straight answer, they're trying to fob you off.

I'm not happy at all.

There's always that small print that's got the clause in that you didn't realise.

We're being ripped off, big time.

Whether it's a deliberate rip off, a simple mistake,

or a catch in the small print, we'll find out why you're out of pocket

AND what you can do about it.

Keep asking the questions, you know, go to the top if you have to.

We get results, that's the interesting thing.

Your stories, your money, this is Rip-Off Britain.

Hello and welcome to Rip-Off Britain, the series that fights to sort out your complaints

and makes sure no one takes advantage of you or your money.

Too right! Today we tackle a subject that affects every one of us,

and can leave you feeling confused or ripped-off - energy bills!

-The dreaded energy bills.

-Exactly.

It's on everybody's minds during the winter with these higher prices.

We'll be looking at some of the mistakes energy companies make

when it comes to your bills

and exposing the hidden hikes you may not have spotted.

Coming up: Why the cost of a boiler break down

has left hundreds hot under the collar.

We are not happy about it, because we're paying £199 for it.

Plus, paying the price of the energy companies' mistakes.

Backdated bills for tens of thousands of pounds.

The additional amount being asked for was a very alarming £38,000.

And we lay on some expert advice at our one-stop pop-up shop.

The huge rise in our energy bills couldn't have come at a worse time.

It's estimated that up to a quarter of households in the UK are living in so-called fuel poverty

when more than 10% of your total income goes on keeping warm.

But what if the increases are only the tip of the iceberg?

Trevor Watson worked out that the price rises in his bill were far higher than he'd read about.

In fact, up to 40% higher.

So we decided to investigate.

This winter, for millions of people,

the cost of keeping warm is more worrying than ever.

Which is why we've heard from so many people concerned about their bills.

Among them, Trevor Watson.

When I did the maths on mine, the huge increases,

I thought, "This cannot be true. It's totally unacceptable."

I was so angry. I could not believe it.

Trevor gets his energy from Scottish Power,

after switching in December 2010.

When he's not volunteering at a local National Trust orchard,

this retired project manager knows how to root out a good deal.

I came across Scottish Power's online energy saver 2011.

And that suited me.

So I switched to that in December, 2010.

And everything was fine until I saw these horrendous price rises being proposed.

In June 2011, Scottish Power advertised an average price increase

of 10% on electricity and 19% on gas.

For the average dual fuel customer,

that works out at £174 increase on the yearly bill,

but thanks to the particular tariff that he was on, Trevor faced an even bigger price hike.

I investigated my own tariff

and I was absolutely horrified when I worked out

that the increase they were proposing for my electricity

was up to 25%, and for gas was a whopping 61%.

61%?! I just couldn't believe it.

When I worked out the cost for myself

on my own annual consumption,

it worked out as a whopping 40% increase or about £420.

That is just totally unsustainable.

Trevor contacted the company to point out the discrepancy

between the advertised price rises

and what his own increase would be. They responded stating

the reason for the larger than average increase

was due to him being on one of their most competitive tariffs.

And that made me even more angry,

because they gave two reasons for my horrendous increase in prices.

The first was that I was on one of their most competitive tariffs.

That's a fact, not a reason to take away the competitive element.

And the second one was that there was a price rise in November, 2010,

which I missed! Totally irrelevant,

because I didn't even join Scottish Power until December.

'It makes me angry because I feel impotent'

that I'm just a single person trying to battle against

these big giants who make billions of pounds of profit.

Scottish Power told us their prices have risen because their own costs

have increased significantly.

The figures they announced were averages across Britain

for all products and payment methods,

but every customer then got an individual letter

allowing them to cancel without any penalty.

They say Trevor's tariff was a limited online offer,

and even though prices had to increase,

it will still track 2% below standard direct debit prices.

Energy price comparison experts say rather than settling for higher bills, consumers should think

about switching supplier as there's still big money to be saved.

The energy companies have made it incredibly complicated

to understand what tariff you're on and how much energy you use,

and it's putting a lot of people off wanting to get involved.

Don't give up. If you do, they will win

and you will forego that 15% or 20% you'd cut off your bill.

The good news is it's getting easier, the regulator's making them simplify their tariff structures.

But is the British public getting the energy switching message?

-Do you ever shop around for different tariffs?

-Oh, yes.

I do. I do all the time.

-But are you aware of how many tariffs there are within each company?

-No, I'm not.

But I'd sooner stick to what I do.

-So you might be able to save a bit of money?

-Perhaps so,

but I haven't got a computer or anything,

so I just carry on the way I am.

I've tried to get my tariff fixed,

so I did a bit of online research just to get a feel for the prices

before I committed to anything.

How long did you get it fixed for?

-A year.

-So you were ahead of the game.

-Every penny counts!

-Sure does.

Trevor's now swapped his tariff for a fixed one.

To me, there just seems to be something rotten in the energy industry and their prices.

If nothing changes,

there's nothing to stop them doing this over and over again.

But he doesn't think any individual energy company is a bad apple.

He'd like to see all their prices overhauled, root and branch.

Well, we can't all work out our bills as well as Trevor,

so if you'd like a bit of help, you can find advice on our website:

When you've got a problem, it can be hard to know where to turn.

So to help, for one weekend in September,

we opened a pop-up shop in Manchester,

offering free consumer advice from a range of experts.

Scott Byrom from Moneysupermarket

was kept busy dealing with worries about energy bills -

how to work them out, and how to pay for them.

Janet had been paying her energy bills by direct debit,

which she thought would be more straightforward,

but that wasn't how it turned out.

In January 2010, I was surprised when I got a bill for £400,

saying that I was in arrears of £400

and that they were going to take it out the following month.

I thought, "Fair enough if I've not been paying enough."

I did pay that off.

They increased my direct debit payments,

then in the summer they wrote to me saying I was now in credit.

'Now Janet was in credit,

'the utility company cut her direct debit to £48 a month.'

So consequently again, after this winter, I received a huge bill,

because we had such a harsh winter, of £700 in arrears

which they just want to take out the following month.

This kind of thing shouldn't happen? They are at fault for handling her like that?

Also, the idea of a monthly direct debit is it's balanced throughout the year.

I don't understand why they've changed your direct debit

from £120 down to £48.

That's a huge dip.

The first thing I'd advise you do is make sure the meter is correct.

Take a meter reading, leave it for a week and read what it is again.

That should then identify whether your meter is running correctly

and indicates whether this debt that you're now in is yours to pay.

The general advice is to be more proactive about your energy bill,

so if you're on top of it, you're taking your own meter readings,

you should be aware of how much you're paying,

and hopefully, you'll avoid finding yourself £600 in debt.

Janet, good advice there, I think,

and with a bit of luck, it shouldn't happen again.

Let's hope not. Thanks for coming in.

-Thank you very much.

-Cheers. Bye.

Other consumers used our specially constructed gripe box

to air their frustrations about the energy price hikes.

Although the big six energy companies have now started to drop prices,

they're not putting them down by as much as they went up.

Hello, I want to speak on behalf of all the rest of the household owners

regarding the electric and gas bills going so high.

Don't you find electric bills go up, up and up?!

And then you look in the paper and find out these electric firms

are making millions of pounds of profit - for who?!

With all of us paying more for gas and electricity bills this winter,

it is of course a good idea to try to save money by becoming more energy efficient.

Having your old boiler replaced with that shiny, new condenser boiler

is a great start, but I warn you, there's no instant return,

because they don't come cheap. Now, imagine the frustration if,

after you shelled out thousands of pounds to get one,

winter strikes and your boiler packs up.

It's bound to get you hot under the collar.

December 2010.

The fiercest cold snap for a century left us all sheltering in the warmth of our homes.

But not everyone was suffering.

The UK's biggest domestic energy supplier, British Gas,

has reported profits of £742 million.

And those profits were a double blow for some British Gas customers.

Not only are they now paying higher energy bills,

but thousands of them have also been told they'll have to shell out

even more money to fix a problem with a particular type of boiler

which British Gas sold them.

Every year, a million people need to replace their boilers, and it's now

a legal requirement that when you do, you install the condenser type.

These new models may be efficient,

but they're not always fans of sub-zero weather, breaking down

and leaving people without heat at the very time they need it most.

And that's what happened to Jean and Gordon, who, in 2005,

paid £4,016 to have a new Glowworm condenser installed by British Gas.

Well, five toasty years followed, until Christmas Day 2010,

when their boiler suddenly threw in the towel.

I got up and said, "It's a bit cold in here."

I felt the radiators, cos they should have come on, and he said,

"Well, I don't know."

The problem was down to the extreme cold we all felt in December 2010.

Temperatures of -20 caused the boiler to stop working

because a small plastic pipe designed to vent

condensation had gradually frozen, causing the system to shut down.

An engineer came out and confirmed the pipe would need replacing,

at a cost of £199.

Well, we were not happy about that, because to us

it's a design fault, so whether it is a fault of the manufacturers of

the system, or British Gas doing it, it's just not fit for use, really.

Not in those circumstances.

And you can see why they might say that -

because their broken boiler wasn't a one off.

British Gas has written to 46,000 customers who suffered

similar breakdowns in 2010, advising them that they now need to

fit an extra part so the same thing doesn't happen this winter.

That can cost between £149-199.

Jean and Gordon are having theirs replaced today.

This is the pipe, up here, that hung down the wall

and goes into the guttering.

That is the pipe that was freezing in the winter.

They put the boiler in - as far as we knew, it was a workable boiler.

OK, it's six years old, but nobody should give you something that

you cannot use full time, whether it's hot or cold.

Two hours later, here's the new-look winter pipe,

fitted with a part called a trace element.

Effectively, a hot wire, which warms the plastic pipe to prevent freezing.

And the couple are nearly £200 lighter.

We are not happy about it, because we're paying £199 for it,

but we're just going to hope and pray that it will work for us.

If every one of the 120,000 new condenser boilers which

British Gas have installed each year

since 2005 needed to be upgraded this way, then what they're

charging for the new part would bring in over £107 million.

So, is that just adding to their profits, or does

the boiler have a fundamental flaw which they should repair for free?

We asked them, and they said no.

British Gas told us it's only during the prolonged freezing

weather of the last two years that the problem came to light.

To prevent it, they now install pipes on the inside whenever possible.

And for outdoor pipes, they supply the part that Jean and Gordon had fitted.

But they say they do so at cost-price, making no profit.

The boiler's manufacturer, Glowworm, says there's no fundamental fault,

pointing out that the external pipe worked for

five typical winters, and that the more extreme winter of 2010 affected

all manufacturers and installers, not just them,

which the industry's lead trade body,

the Heating and Ventilating Contractors Association, has confirmed.

But Jean and Gordon, as you imagine,

are still disappointed that they had to pay.

It doesn't feel fair, it doesn't feel right.

At a time when money is tighter than ever, you need to know

your cash is working hard for you, avoiding rip-offs along the way.

So, we've put together a booklet of tips

and advice to help safeguard your money.

You can find a link to the free guide on our website.

Or, to receive a copy in the post, send an A5 self-addressed

envelope to the address we'll be giving at the end of the programme.

Hundreds of small businesses are being hit with crippling bills

because it turns out that for years they've been undercharged.

Even though they knew nothing about it, they are now suddenly being told, "Pay up!"

Rick Waters owns a small independent shopping centre in Rye, Sussex.

Home to around 20 small businesses,

he's been running it for the last 20 years and it's become an established part of the local community.

The secret to the shopping centre's success is that Rick keeps running costs low.

But in January of 2011, he received a letter from his electricity supplier, EDF Energy,

that threatened all of that.

We received a huge envelope from EDF Energy

which contained a demand for just under £60,000.

Now, the normal monthly bill at the time was about 200, maybe 250.

To make matters worse, the bill -

or bills, because there were no less than 192 pages of invoices

going back four years -

arrived during Christmas, when the centre was shut!

So I didn't actually pick up the envelope until 7th January

and by that time, we'd received another letter which was a reminder

dated 4th January, saying "You should have paid this by now."

I mean, some of this defies belief.

With no easy way of getting hold of £60,000,

Rick feared that he'd have to close the shopping centre.

That, or make himself very unpopular with the tenants.

'You can't go round to the tenants

and say, "Right, that's £2,500 each, please."'

Life doesn't work like that.

So why exactly was Rick sent such an enormous bill?

Well, it seems that in January 2007,

EDF made what they call an "administration error"

and started billing the centre for ten times less electricity

than they were actually using.

The result - a whopping backdated bill

and no way of paying it back.

On 14th January they sent a threatening letter

saying, "You haven't paid the bill. If it's not paid within five days,

"we're going to come and cut you off, take you to court."

Domestic customers can only be asked to pay bills dating back 12 months,

but Rick is far from being the only person to have discovered a very different situation for businesses.

The Crossing Church And Centre in Worksop is a charity

that received a similarly hefty bill from their gas supplier -

British Gas.

Mark Pengelly is the reverend.

Out of the blue one day, our church treasurer received

a new set of bills from British Gas which went back

over the complete four-year period since we'd opened.

The additional amount being asked for, for the back payment over the four years,

was a very alarming £38,000.

Unable to pay the bill, the reverend began negotiations with British Gas,

and even though it was all down to the meter underestimating the church's consumption,

they insisted that he still had to pay for all of the backdated gas that the church had used.

With little choice, Mark agreed to pay an initial £10,000, and then pay the balance off monthly.

But as the church relies on volunteers and donations to keep going,

the affects of this bill have been far-reaching.

Paula Howard is the centre administrator.

It's been quite a shock to the system. If that has to be passed on to our users,

especially community users, it'll have a massive impact

because we won't be able to subsidise their meetings as far as we do now.

That threatens the survival of popular activities

such as the Knit And Natter Group.

It would be difficult to find somewhere else that would help us in this way.

Cos the church have been very kind to us.

No matter whose fault the error,

energy companies can currently bill businesses for up to six years

of back payments. Regulator Ofgem would like to see this reduced to one year,

in line with domestic customers.

But until that happens, there's nothing to stop businesses like the ones we've met

from being landed with huge back bills.

We contacted both EDF Energy and British Gas for their comments.

Both apologised for the "inconvenience caused"

and in each case, they've reduced the bill and agreed

an extended repayment plan.

EDF have also switched Rick to a better value tariff.

British Gas point out it wasn't them that installed the church's faulty meter,

although the company that did insists that their annual inspection

had flagged up that there may be an issue.

Meanwhile, Reverend Pengelly

has had his faith in British Gas severely tested.

In one sense,

we don't dispute the fact that that meter may have been reading wrongly

and technically, we have been underpaying.

But we feel that if we've been treated very unjustly

and to say, "Actually, you owe us three times the amount per month,

"and you owe us £38,000 as a back payment,"

it's really undermined all of our financial planning of the last five years.

Undoubtedly, the largest number of complaints we get from our viewers is all to do with energy prices,

the lack of clarity from the energy companies,

the confusion about tariffs, how many tariffs there are

and indeed how to read your own bill correctly.

'So I've come to Energy UK,

'who represent the UK's gas and electricity industry,

'to see if they can make things just a little bit clearer.'

Christine, most of our viewers seem to not be able to read their bills,

and I must say, myself included. Can you read yours?

I can read mine, but I work in the industry, so you'd expect that.

But certainly there is a lot of information on bills.

You have to have...your last meter reading, your latest meter reading,

gas, electricity, which tariff you're on, your energy consumption.

There's a lot of stuff on there and a lot of it is actually required

to be there by the regulator, but the companies

are working hard to make it as simple as possible.

You say you're making moves and the big companies are working together.

The reality is you all seem to be in cahoots with each other.

Many think that Ofgem should just split the whole business up

and really enforce more open competition.

The appearance may be very different from reality.

We know the market is competitive and we would urge people to make sure

they're taking advantage of it by getting the best deal.

If you've never switched, you can save hundreds of pounds.

You make it sound simple. "You can just switch, get a better deal."

The reality is that Ofgem, two years ago, told the big companies

that you had 200 different tariffs on the market and to stop that.

Now it's 400 different tariffs.

What chance do I or a more vulnerable person,

what chance do we have of sorting that out?

Because I don't think you're moving fast enough towards what you're saying.

Well, I think the companies take this extremely seriously

and they do recognise there are areas in which consumers expect more.

One example, one company has recently just slashed its number of tariffs

by about a third and there will be more changes to bills, to annual statements.

The regulator is changing the way tariffs are going to work,

so there are lots of things happening.

But the reality is that bills are soaring, profits are soaring.

That is very confusing and if I may say, very annoying

for the consumer because it's all, "We'll do this, we might do that."

At the same time, your shareholders are pocketing.

That's absolutely not the case and if you look at the detail

on profits, pound-for-pound, companies are investing more every year

than they're making in profit.

But let's talk about help. There's a huge amount being done this winter

-to help the most vulnerable people...

-For example?

-..which everyone is concerned about.

For example, 200 million being spent on a wide range of initiatives

that includes, for example, an automatic £120 off your bill

for the 600,000 poorest pensioners.

Several million, I think it's around 4 million letters going out,

to try to reach the priority customers and get them insulation.

Insulation is not a big, sexy headline story

but it'll save these people hundreds of pounds year after year.

-Christina, I'll come back and see you again next year. Thank you.

-I look forward to it.

Here at Rip-Off Britain, we're always ready to investigate more of your stories.

Confused over your bills? Trying to wade your way through

endless small print that leaves you none the wiser?

I might've been stupid for not reading it

or I've read it and not taken it in.

I could kick myself. I really could.

Unsure what to do when you discover you've lost out

and that so-called "great deal" has ended up costing you money?

I thought, "This cannot be true. It's totally unacceptable." I was so angry.

You might have a cautionary tale of your own and want to share

the mistakes you made with us, so others don't do the same.

No-one knows about this, so this is very strange to me.

I really would like to get this much clearer.

You can write to us at...

Or send us an email to...

The Rip-Off team is ready and waiting to investigate your stories.

From the stories we've heard today, it's obvious our energy companies

don't always make things easy for us,

but when the cost of keeping warm is such a financial burden,

we need our bills and tariffs to be as simple to understand as possible.

We certainly do and never forget if you get bad service,

don't put up with it.

Switching suppliers really is not that complicated, though a lot of people still haven't done it.

Just don't be afraid to take your business elsewhere.

Which is exactly what I did last year due to this programme.

That's just about it for now.

I do hope you'll join us again when we'll be investigating even more of your stories

and showing you how to avoid being ripped off.

-Until next time, thank you for your company and see you soon. Bye-bye.

-Goodbye.

-Goodbye.