National Grid, a Utility that hit the headlines last year when it was caught trying to use its senior executives food and travel expenses as a justification for raising energy prices across the North-Eastern United States, is in the news again this week – for all the wrong reasons.
In a blow to its CEO, former band roadie Steve Holliday, National Grid announced that many of its 18 million gas meters in the UK are routinely overcharging customers. The sums involved total millions of pounds a year, possibly tens of millions. The company says that the problem is restricted to certain models of gas meter, especially older ones, but also models made in 2000.
Most disturbing is that the gas meters almost always overcharge – they rarely if ever undercharge. Also the company had for years said that only a small percentage of the meters were faulty but has now admitted that the true figure is 88 per cent for the older models and 69% for the newer ones.
A few days earlier, it emerged National Grid has allowed its name and logo to be used in the United States on a fake demand for bill payment. Three million copies of the fake solicitation were sent out by HomeServe USA, which sells insurance coverage for repairs to furnace and plumbing systems.
The Consumer Federation of America (CFA), a consumer watchdog group in Washington. which reviewed a copy of the mailing, said it appeared to intentionally confuse customers into thinking that it was a demand from National Grid for payment. It includes a “reply by date,” option to pay by credit card, and a total: $191.20.
The mailing by HomeServe USA, a subsidiary of a separate British firm, is part of a direct marketing effort to 3 million people in the Northeast, done in consultation with National Grid, the regional natural gas and electricity provider.
Meanwhile Nationla Grid customers are relling from a series of outages such as the one affecting thousands of consumers in Suffolk, UK who had their gas cut off for several days after a pipe was sliced by incompetent contractors working for…National Grid. At the time of writing, power is still off.
It may be time for Moody’s, the rating agency, to re-examine the company credit rating. The company has one of the safest business models imaginable. A massive 95 per cent of its revenues come from regulated businesses, so its income is “decoupled” from the volumes its infrastructure carries. But such a constant catalogue of complaints, insincerity, price-fiddling and bad service cannot be god for the company’s credt-worthiness.
Harry Pierre, a spokesman for Massachusetts Attorney General Martha Coakley, said the office has received several complaints from consumers “that HomeServe’s solicitations closely resemble National Grid utility bills.”
Myles Meehan, senior vice president of HomeServe USA, said the offer was not an attempt to dupe customers into paying a bill, but rather an effort to win back former customers, bearing no resemblance to a bill.
“I think it’s laid out in a very straightforward manner,” Meehan said. “I get bills and I’m sure you do too. They look very different.”
Actually, they do not, said Susan Grant, director of consumer protection at the CFA “If I received this, I would be surprised and angry to see that it’s actually not something that I owe,” she said. “The way this is done, it just raises my hackles.”
Laddish CEO Steve Holliday, who is seen by some observers as “a bit of a wide boy” has staked his reputation on restoring the company’s fortunes in the US, but so far things are not going according to plan.
Back in the UK, National Grid, which owns about 18 million of the country’s 23 million meters, tested 4,882 of the least reliable meters and found that 88 per cent of a 1983 model of the U6 UGI Black Spot meter and 69 per cent of a 2000 model of the G4 Magnol Version 1 were overregistering.
Fewer than 1 per cent of the devices tested were undercharging. A meter that over-registers by only 4 per cent costs the household an average of £26 in annual overpayment.
National Grid admits that up to 350,000 examples of the former, Black Spot, model are still in use, but says that these remain only “where [meter owners] have been unable to gain access to replace them, despite, in most cases, several attempts to do so.”
Accuracy problems are believed to be the result of worn-out parts in affected meters. Energy companies must provide tests on request to customers who suspect that a meter is faulty. These cost about £90, but this is refundable if the device is found to be faulty beyond a “tolerance” of 2 per cent.
However, the National Measurement Office cautions that most tests find against the consumer. It says: “Around 75 per cent of all gas meters submitted for disputed accuracy testing are found to be accurate.” However this leaves 25% which are NOT accurate. This is an unacceptable level and puts the typical consumer in a bind because they know there is a strong chance they are being over-charged but at the same time the odds are 3-1 that they will be forced to pay the charge for finding out.
Spokesmen for HomeServe USA and National Grid argue that the mailing does not resemble a bill. But it is easy to imagine how an unwary consumer could be fooled by the format into thinking that it is a required payment. The same consumer who might toss a solicitation for aluminum siding or carpet cleaning into the trash wouldn’t be so quick to discard anything with the logo of a utility company. National Grid, after all, has the power to terminate gas or electrical service for nonpayment.
We agree with the Boston Globe which said: “If HomeServe USA is serious about dealing honestly with consumers, it should immediately adopt the recommended language for such mailings from the US Postal Service: THIS IS NOT A BILL. THIS IS A SOLICITATION. YOU ARE UNDER NO OBLIGATION TO PAY THE AMOUNT STATED ABOVE UNLESS YOU ACCEPT THIS OFFER.”
Likewise, in the UK, if National Grid was not so able to run rings around toothless regulators, it would offer free meter tests. If 25% of its meters are faulty, then nothing less will do.If 25% of Toyotas were faulty, every owner would expect a free recall.The same prinicple applies here.
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