The move comes after the regulator, Ofgem, found that the energy firm had not been honest with the information it handed out to persuade customers to swap from another provider.
An investigation by Ofgem, revealed that customers signed up to other energy firms were given misleading information about the savings they could make by switching to EDF. The regulator ordered EDF to repay a total of £4.5 million to its customers, including £3.5 million to vulnerable groups.
As well as shelling out the payment to customers who had been misled, EDF has vowed to help its elderly energy users, by voluntarily switching their tariff to the cheapest available. The firm have been keen to stress this move is on top of the penalty they were forced to pay by the regulator.
Under its announced proposal, EDF will review the tariffs of around 150,000 of its elderly customers, to see if they were on the cheapest tariff available. An average refund of approximately £40 is to be made to 150,000 customers. The money will be deducted from a new bill sometime between now and next winter. The group has also said that going forward it will ensure that the cheapest rate is automatically applied to the accounts of qualifying customers, as well as a discount for direct debit, even if they pay by alternative means.
In order to be eligible for the refund, elderly customers must be in receipt of the Warm Homes Discount, which the government provides to both vulnerable and low-income homes. This discount is a £120 reduction in costs provided by energy suppliers, but initiated by the government and, typically, handed out to pensioners who only receive the guarantee credit part of their pension tax credit.
In addition to the above measures, EDF has also announced that if a rival energy supplier changes its rates and becomes £1 per week (or more) cheaper, based on average consumption, then it will allow its customers to switch, without charging a termination fee.
The chief executive of EDF, Vincent de Rivaz, said that if the ‘most vulnerable and elderly customers’ were not able to participate in the market they would be missing out on the advantages of the competition amongst firms. He said that the new steps being introduced by EDF, meant that even if they were unable to change provider, they would be guaranteed to receive the cheapest rate possible from EDF.
The head of energy retail at Consumer Focus, Gillian Cooper, said the commitment being offered by EDF was a ‘welcome move’ and should prove to be of benefit to ‘thousands’ of its energy customers. However, whilst she stressed the positive aspects of the decision, she added that only pensioners would be able to benefit. Ms Cooper warned that there were ‘many other vulnerable households’ which were being forced to make difficult decisions and were being forced to make a choice between staying warm or cutting out other basic living essentials.
Consumer champion Which? said that energy firms needed to take ‘quick and transparent action’ in order to improve relationships with customers who had been subjected to unfair treatment and misleading information. Consumer Focus recently awarded EDF a rating of zero out of a possible five, for the way it dealt with its customers in the final quarter of 2011. The rating was partially based on the magnitude of complaints it received – 188 per 100,000 EDF customers.
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