Spark Energy responds to Watchdog probe
The company claims that its rates are competitive, and tenants are free to change supplier
Spark Energy has issued a response to a probe by the BBC’s Watchdog programme, in which some customers claimed that it was “impossible” to switch energy provider once they were tied into an agreement with the company.
On the programme, tenants in properties let by Your Move, Foxtons and Reed Rains revealed that they have been automatically signed up to Spark Energy – the letting agents’ preferred energy supplier – via a clause written into their tenancy agreements.
UPDATE: Spark Energy fined £250k over breached rules and complaints-handling issues
However, it is well within consumers’ right to switch their energy supplier at any time and the letting agent cannot impose the services of a particular provider on any tenant.
Despite this, Lee Harrison, who rents his flat through Foxtons, revealed on the programme that he had encountered considerable difficulty when attempting to move from Spark Energy – the supplier he had automatically been signed up with.
After receiving his first bill for five weeks’ worth of gas – which totalled over £500 – Mr Harrison said he attempted to switch supplier, but the process contained numerous stumbling blocks.
“It’s virtually impossible to leave Spark Energy. You get an enormous bill, so you try to contact them to talk about that bill. And when you finally did get through they said they’d look into it, they made me pay a certain amount of money there and then,” he explained.
“That was then ignored, and I got another bill for exactly the same amount. So you have to do the same process and that continues and continues and continues, so you are in a never-ending circle.”
Mr Harrison’s case was not an isolated one, with hundreds of other Spark customers contacting Watchdog to inform the programme about the difficulties they had encountered.
Held to ransom
After consulting his Foxtons contract, Mr Harrison found that Spark Energy was the default supplier, and said that the contract gave the impression that people had no choice but to have their utilities provided through Spark.
“I felt like I was being held to ransom,” said Mr Harrison, who has since found out that for every property signed up to Spark Energy, the letting agent receives a commission, hence companies’ keenness to retain the provider.
In response to the programme, Spark Energy issued a statement claiming that its tariffs are designed to ensure that tenants inheriting its supply receive lower prices than they would otherwise do from the big six – British Gas, EDF, E.ON, npower, ScottishPower and SSE.
“New tenants default to our Direct Debit tariff which is set to be cheaper than the equivalent tariff from the big six. Our pre-payment meter tariff is the cheapest in the UK,” the company stated.
“Excessive bills can occur if customers have not provided a meter reading as we are reliant on using the estimations provided to us by the previous supplier. We also send meter readers to visit properties on a quarterly basis.”
Free to move
Responding to the accusation that it is “impossible” to leave Spark Energy once the tenancy has begun, the energy provider noted that people are “free to move” to an alternative supplier at any time – a process that is standardised between energy providers.
“We specifically designed our processes to be in line with the Office of Fair Trading (OFT) and Ofgem guidance. We will check that all our partner agents and customer-facing staff are conforming to this and that their leases contain the clauses making this clear to tenants from the outset,” the provider added.
Spark also confirmed that it pays a commission of £10-£15 per property for choosing it as the incumbent supplier, while no commission is earned or lost when tenants subsequently move in or change supplier.
According to the company, this covers the cost to the lettings agency of “administering the utilities when the property is empty and transferring to Spark”.
Adhering to guidelines
The three letting agents named in the programme also issued responses, with a Your Move spokesman stating that its contract with Spark Energy is “within the requirements of the OFT and Ofgem guidelines” and reiterating that tenants have the option to choose their long-term supplier and are not prevented from changing it.
“We do not hide the fact that Spark Energy is the ‘default’ utility supplier. An offer letter advises prospective tenants that Spark Energy will supply gas and electricity at the date the let commences … and we also advise tenants that they can switch from Spark Energy at any time if they wish to do so, which is now highlighted in their tenancy agreement.”
Reeds Rains said that Spark Energy is the default energy supplier to make the transition easier for tenants and because it is the only Ofgem-accredited supplier of energy that specialises in supplying tenants.
“We continually look to improve our service and communication with our customers and to this end we have already taken the decision to reiterate and re-enforce in the wording of the tenancy agreement that tenants are free to switch supplier at any time in addition to the other methods already in use,” the company said.
Finally, a Foxtons spokesperson said that tenants are informed that the incumbent energy supplier at their property will be Spark Energy prior to the commencement of their tenancy, and their move-in pack also contains this.
The company said that Spark offers “highly competitive rates” but said tenants are free to change supplier once they move in.
“We ask them to notify us before switching so that that their landlord can be kept informed and we believe this is in line with the OFT’s guidance,” Foxtons added.
A long way to go
All three lettings agents noted that Spark Energy has vowed to keep its energy bills lower than those of the Big Six energy suppliers, though Watchdog revealed it has received 200 complaints from Spark Energy customers regarding inflated bills and a struggle to switch providers over the last year – and many more since this week’s programme was broadcast.
Spark Energy, Your Move, Foxtons and Reed Rains all called for better regulation of the market to protect consumers and ensure that tenants are fully aware of their rights.
While some lettings agents have now taken steps to boost the transparency of rental agreements by highlighting issues such as the default energy supplier, the wellbeing of consumers will only be guaranteed through the introduction of further consumer protection regulation guidance to ensure the whole lettings industry is properly regulated.