Fight to gain better gas deal for Islanders

It's a fight that is set to go the full 12 rounds if Stornoway resident Derek McPherson has his way.

Friday, 10th August 2018, 2:47 pm
Updated Friday, 10th August 2018, 3:18 pm
Local consumer champion Derek McPherson has fought a long-running battle with Scottish Gas to win Islanders access to their range of tariffs and now he wants to see the company pay compensation to Stornoway customers.

The local consumer champion has been taking up the cause of Island gas users over the last few years to ensure they can access the best deals and save money on their fuel bills.

His opponent is the energy giant Centrica which trades as Scottish Gas.

With encouragement and support from Western Isles MP Angus MacNeil, Derek has led the charge in ensuring Islanders are now aware that they can access a range of tariffs from Scottish Gas, which could save them money.

With that round won Derek is now squaring up to win compensation for Stornoway customers.

The twists and turns of this story are still unfolding, but a maze-like tangle of information revealed during the progression of Derek’s fight, underlines the hurdles faced by consumers when looking for the best energy deal.

The first indication of unfairness to Island consumers was identified by Derek, who owns the Fernlea Guest House on Matheson Road, in 2012 after a conversation with his sister about the “ridiculously high” price of gas.

The conversation soon revealed that his “mainland” sibling was getting a much better deal on her gas.

After asking Scottish Gas about the inconsistency he was told that Stornoway customers could only access one tariff specific to Stornoway (piped propane standard tariff), as the cost of bringing gas to the Islands was so high, that Scottish Gas was already “heavily” subsidising its customers here.

Derek accepted this seemingly reasonable explanation and continued on the same tariff with the company, but he pursued a conversation with the energy provider about available tariffs.

In response, in March 2013 he received a letter from Scottish Gas saying that “as a gesture of goodwill” they would pay him £102, which, he was assured, equated to the “discount (he had) lost out on over the last year”.

Puzzled by the unexpected largesse of the utility company, but with other things on his mind, Derek accepted this offer and let the matter go.

The years went by, but the to and fro of looking for the best gas deal out there continued to bother Derek and the matter was brought into sharp focus again in October 2016, when he was chatting to another Stornoway resident, who revealed he was getting a 30 percent saving on his gas bills compared to Derek.

Using information about his friend’s tariff, Derek quickly got on to Scottish Gas and asked to go on the same tariff, but frustratingly, they would not transfer him to the better deal.

Up against a stone wall, Derek went to the Energy Ombudsman, as he knew this was the correct procedure to get a resolution.

In November 2016 the Ombudsman wrote to Derek to say they would take up his case, but only ten days later they got back to him to say they couldn’t get involved as (based on incorrect information it had received from Centrica) the matter was outside its “terms of reference”.

A few months down the line the Ombudsman, armed with correct information about the matter, wanted to take up Derek’s cause again, but by that time Derek had moved on and had asked Western Isles MP Angus MacNeil to get involved.

In the meantime, Derek had become aware of an even better deal being offered by Scottish Gas under the title ‘The Sainsbury’s Energy Tariff’, which was initially sold through UK Sainsbury’s stores - hence the title.

The new deal was an immediate success, not surprisingly, as it offered consumers massive savings if they signed up for both electricity and gas.

Information regarding the “Sainsbury’s tariff” (after the industry regulator, Ofgem instructed Centrica to do so) was printed on the front page of every Scottish Gas customer’s bill, although it is believed only a small number of Stornoway customers (through online application) ever managed to access it, even though it should have been open to existing, as well as new customers.

In Derek’s case, the Sainsbury’s tariff would have saved him £600 per annum (he has since been offered £1,545.62 for the savings he should have had between March 2013 and December 2016).

Other town residents could have saved even more depending on their usage.

Derek repeatedly called up and asked to be put on to the tariff, but was continually told “Sainsbury’s don’t deliver gas to Stornoway” and therefore the tariff was not available to customers here.

Derek asked for that information in writing, which he was given, on three separate occasions.

Once again it seemed as if Stornoway customers were unable to access the best deal due to our geography and the “high price of transporting gas to the Islands.”

But in a twist to this tale, Derek and Western Isles MP Angus MacNeil discovered, that in fact, neither Scottish Gas, or Sainsbury’s, transports gas - or bear the associated cost of doing so - to Stornoway.

When the gas market was opened up in the mid-1990s a new system of transporting gas to the Islands was implemented.

Run by Ofgem - a tiny levy (a fraction of a penny) is applied to every unit of gas sold in the country - these funds are used to pay for the transportation of gas to Stornoway and other geographically challenged areas through private companies (Scotland Gas Networks supplies Stornoway).

Scottish Gas does not pay for the transportation of gas to Stornoway - every gas consumer in the country does via the ‘Socialisation of Gas Transportation’ levy.

So from the mid-90s onwards Scottish Gas was making a substantial saving, which could have been passed on to its Stornoway customers.

But it seems the status quo of only one tariff for Stornoway customers continued.

The fly in the ointment for Scottish Gas was that the deal to lift the burden of cost from them to transport gas to the town had a stipulation - it had to offer all tariffs to its Stornoway customers.

This rule has been highlighted by Derek, the MP and many other town residents who have struggled to gain access to the best tariffs available.

By firmly fixing the spotlight on this issue they hope to ensure that every gas consumer in Stornoway is fully aware that they can access the best possible tariffs on offer and make substantial savings on their fuel bills.

But should these customers - believed to be around 1,546 in Stornoway - be offered compensation for the savings they were not able to access?

That question is not in doubt for Derek, who despite his own offer of compensation, vowed to continue the battle for as long as it takes.

Asked why he is so passionate about this matter, which has drawn heavily on his time and energy over the last few years, he explained: “I was chatting to a local lady, who told me she had to go to the old folks’ club every day it’s open because she can’t afford to heat her home.

“There is nothing wrong with companies offering energy at a particular price, but it is unacceptable when people are incorrectly prevented from making savings whilst the rules clearly state they should be able to access more economic tariffs, especially in a town that is also one of the highest in the league of fuel poverty!

“Well it is for those reasons that I said ‘I’m not going to tolerate this!’

“And as Scottish Gas now knows, I won’t.”


In regards to the issue the Stornoway Gazette approached Western Isles MP Angus MacNeil, who has been aware of the matter for some time, for his view.

He said: “Gas customers in Stornoway were denied access to the cheapest tariffs – potentially paying thousands of pounds more than mainland customers.

“This issue was first brought to my attention by my constituent, local businessman Derek Mcpherson back in 2016.

“I raised this with Ofgem and have had ongoing dialogue with them and Scottish Gas to ensure that all customers have access to the best tariffs.

“This is an ongoing matter and I support the dedicated efforts of Mr Mcpherson not to let this go.”


The Stornoway Gazette put a number of questions to Centrica this week in regards to the points raised by Derek McPherson.

In answer to these a spokesman for the company said: “More than 350 of our customers in Stornoway have switched tariff to take advantage of a different deal.

“We write regularly to all Scottish Gas customers telling them if there is a cheaper tariff available, and many take advantage of this to switch.”

However, Centrica was unable to provide a response when we asked if Stornoway customers were told incorrect information about available tariffs in the past.

There was also no response when we asked if Stornoway customers would be compensated for not being able to access the best deals available.


In the search for an independent source of advice and support over his dealings with Scottish Gas Derek McPherson asked the Energy Ombudsman Services to look at his complaint against Scottish Gas.

He hoped this move would bring expert eyes into the proceedings, but in the end, Derek felt the Ombudsman’s involvement hindered rather than helped his case.

In fact his dealings with the Ombudsman, in itself, led to a court case which was heard at Stornoway Sheriff Court on July 26th, which Derek won.

In the dispute with Scottish Gas, which he felt was not progressing, Derek had asked the Ombudsman to get involved, as he felt this was the correct procedure to progress his complaint against the utility company.

He was told by the Ombudsman that they could not pursue his complaint as it fell out-with their remit.

Derek accepted this and continued to pursue the matter by himself.

A few months later the Ombudsman had a change of a heart and told Derek that they would pursue the matter, but he told them at that point he didn’t want them to be involved.

The Ombudsman continued their investigation despite Derek’s instruction that he no longer wished them to.

This cost the Stornoway businessman, time and stress and it was compensation for the many hours he put in dealing with the Ombudsman - through correspondence and phone calls - that was the backbone for his court case.

Derek was claiming £3,350 in compensation for the work involved. He was awarded £750 in compensation and £150 in costs at Stornoway Sheriff Court.

He estimated that the Ombudsman, which is a private company with no support from public funding, spent thousands more in defending the case.

In a statement about the court case a spokesman for the Ombudsman Service declined to comment on the costs of defending the case, but said: “We provide impartial and independent decisions relating to unresolved consumer complaints.

“We are professional and robust in our complaint investigation handling, whilst at the same time recognising that this can be a stressful time for consumers.

“We believe our response and conduct in this case was fair and reasonable. We do, however, respect the Sheriff’s decision.”

The Energy Services Ombudsman is funded via a mixture of subscription fees and case fees paid by participating energy companies.

The service is free to consumers, who wish to make a complaint about a company.

The premise is the more complaints via the Ombudsman the more that company has to pay, giving them an incentive to resolve complaints successfully in-house.

On their website the Energy Ombudsman Service states: “Ombudsman Services is a national private sector ombudsman scheme. We independently resolve complaints between consumers and companies that are signed up to our scheme. Our service is free for consumers. We are an impartial and cost effective means of resolving disputes outside of the courts.

“We base our decisions on what is fair and reasonable. When we make a decision we take into account: both sides of the story; regulatory rules, guidance and standards; codes of practice, relevant law and regulations.”

We pay a far higher price for fuel poverty than expensive energy bills, see our story at: HERE