Baby Ace: Two in three baffled by energy pricing: Bills are so complicated that millions cannot identify the cheapest deal

Friday, March 14, 2014

Two in three baffled by energy pricing: Bills are so complicated that millions cannot identify the cheapest deal

By

Sean Poulter

Energy tariffs are so complicated that two in three customers have no idea how to identify the cheapest deal, according to a damning new study.

The complex combination of standing charges, kilowatt hours and unit prices leaves most of us baffled.

The ‘big six’ energy firms have been told by industry regulator Ofgem to cut the number of tariffs and deals to help families find the best value.

A damning new report has shown that two in three people are baffled by energy prices, confused by a combination of standing charges, unit prices and kilowatt hours

Despite these changes most people are still in the dark when it comes to deciphering how much they will be charged a year, according to research by consumer champion Which?.

The group provided details of the standard tariff charged by the big six – British Gas, SSE, EDF, E.ON, Npower, and Scottish Power – to just over 500 people.

Only a third – 35per cent – managed to pick the cheapest deal when tariffs were presented in line with the structure put forward under Ofgem’s Retail Market Review (RMR). This requires firms to list a unit rate and standing charge.

Of the rest, three in ten – 31per cent – picked the wrong tariff and a third – 34per cent – either did not think it was possible or did not know how.

Four in ten – 41per cent – used an aid to do their calculations such as a calculator or spread sheet, yet only half of these people got it right.

As well as changing the structure of tariffs, Ofgem is also introducing a new system spelling out how they should be presented to customers under the so-called Tariff Comparison Rate(TCR).

This displays the tariff on the basis of what a medium energy user would pay for their gas and electricity. While useful, it does not help someone who is a very low user or a very high user to find the cheapest deal.

The Which? research found that only 8per cent found the TCR display easy to understand.

When people were asked to pick the cheapest deal for a very low-energy user using the TCR figures, nearly two thirds – 64per cent – got it wrong.

The ¿big six¿ energy firms – British Gas, SSE, EDF, E.ON, Npower, and Scottish Power – have been told by industry regulator Ofgem to cut the number of tariffs and deals to help families find the best value

Which? has been campaigning for a system that does away with the standing charge and applies a simple unit rate for gas and electricity.

Its research shows eight in ten – 81per cent – were able to pick the cheapest deal when they were presented with the tariffs in this simple format.

Which? executive director Richard Lloyd said: ‘In spite of Ofgem’s tariff reforms to simplify the market, consumers are still failing to spot the cheapest deal because energy pricing remains too complicated.

‘More radical changes are needed to fix the broken energy market. That’s why our Fix the Big Six campaign is also calling for a full competition inquiry, so that hard-pressed consumers can be confident that the market works well for them as well as shareholders, and that the price they pay is fair.’

The last time Which? carried out a survey of whether customers could understand bills in 2012, just 8per cent managed to find the cheapest option. The increase to 35per cent this time is an improvement, but the majority still struggle to negotiate the maze of figures

The industry’s trade body, Energy UK said: ‘Energy companies have made great changes helping customers find the best deal available. We are pleased the survey results show an increase in customer understanding and the energy industry is continuing to work with customers and consumer groups so more people understand their bills and choices.

‘Already tariffs have been radically streamlined making it much easier for customers to understand bills and compare deals. Most recent figures show that around 1.3 million customers switched in the last quarter of 2013 alone. This is a welcome sign we are moving in the right direction and that the process is easy to follow and the energy industry is increasingly competitive with plenty of suppliers to choose from.’

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Assume The Position,

So the Tories can Kill You, United Kingdom,

5 hours ago

It’s the same with mortgages, phone contracts and flight bookings. The more our government’s “de-regulate” capitalism, the more that same capitalism shafts us.