Independent Energy rapped for billing fiasco

The energy regulator Ofgem yesterday ordered Independent Energy to stop taking on any more domestic electricity customers after billing problems led to its switchboard being jammed and a deluge of complaints.

Independent Energy, which reports third-quarter results next week, had been signing about 4,000 new domestic and small business customers a week, but it will have to freeze its marketing campaign until billing problems are sorted out.

The announcement from Ofgem prompted an 18 per cent slide in Independent Energy shares, wiping more than £180m from the company's market value. The shares closed 450p down at 2,100p.

John Sulley, chief executive of Independent Energy, said he was confident that the billing problem could be largely cleared up by the end of June, allowing the company to start taking on new customers. The problem first emerged in February when Independent Energy disclosed that it had been unable to bill tens of thousands of customers for electricity already supplied because of difficulties in getting meter readings from their previous supplier.

At the time Independent Energy had cleared 52 per cent of the backlog, but this still left an £80m shortfall in the company's accounts. By the end of March, more than 60 per cent of the backlog had been cleared and the company has made further progress since then.

Mr Sulley stressed that the problem did not apply to the 50,000 or so new domestic and small business customers it had taken on since February. "We believe we are billing customers in a timely fashion," he said.

But as Independent Energy began to send out more bills to clear the backlog, its customer call centre, run by United Utilities offshoot Vertex, was jammed by the sheer volume of calls. This resulted in customers not being able to get through at all and a "significant" increase in complaints to Ofgem, the regulator said.

A new condition written into Independent Energy's licence by Ofgem prevents it from taking on new customers until it has satisfied the regulator that its performance has improved.

This will mean the company demonstrating that bills are issued on time, that customers are transferred properly, and that the company can deal with queries and complaints satisfactorily.

Callum McCarthy, head of Ofgem, said: "Customers are entitled to receive timely and accurate bills from their gas and electricity suppliers, and we are determined to ensure that they do. This licence condition clearly signals our intent in this area, not only to Independent Energy but to other suppliers."

Mr Sulley stressed that the company was in full agreement about the need for the additional licence condition. However, he added: "We are confident that within a short space of time the group will resolve its customer service problems to provide improved and superior performance."

Independent Energy has partly been a victim of its own success in attracting such large numbers of customers. The business has grown from a market capitalisation of £13m when it was floated four years ago to a value of £861m at last night's closing price.