We’ve previously asked for your help to tackle energy tariffs. Now, it seems, some suppliers are listening. Although British Gas has made a step in the right direction, weβre still a long way off simple tariffs for all.
There was a flurry of excitement in our office this week, as emails went flying round about British Gasβ plans to simplify its energy tariffs. Hooray! With your help weβve been putting pressure on Ofgem to do this, and getting companies to do it before Ofgem feels like a real success.Β Unfortunately, itβs not quite that simple.
British Gas announced today that itβs βsimplifyingβ its energy tariffs β it will have just fixed and variable. Thatβs great β it means much less confusion for customers as they wade through the British Gas website trying to work out which tariff they should be on.
What’s wrong with energy tariffs?
But many problems still remain. For a start, the new British Gas tariffs still have a βtieredβ structure β where you pay more for your first units of energy. This is something Ofgem is unlikely to be too chuffed about.
At a recent session of the Energy Select Committee, Ofgemβs chief exec described tiers as an βunnecessary complicationβ that he hoped would be βflushed outβ by its tariff reforms.Β We agree that tiers are confusing, but we also think there should be more regulation of tariffs, full stop.
We understand suppliers must add fixed costs to cover their overheads (like transporting energy to your home) but suppliers shouldnβt have free reign over these costs. Ofgem must ensure that the fixed costs everyone has to pay are kept as low as possible. This is essential to prevent low energy users paying significantly more per unit than high users.
Moreover, there are still issues with how tariffs are presented β you can pay for your energy by direct debit, cheque or over the phone, but will your costs be presented simply?
One of our real bugbears about energy tariffs is that, in order to work out how much youβre paying, you often have to work out complex discounts that arenβt included in the unit price but somehow separated out β our investigation showed that people find it very difficult to do this.
What do we want?
Well, we think itβs pretty easy β thereβs needs to be one simple tariff system. Thereβd be a low daily standing charge set by the regulator (to cover just the costs of keeping you connected) and on top of that, a unit price set by your company which includes all discounts.
Itβd be like going into the supermarket to buy a tin of beans β you can simply compare the prices side-by-side and choose the one thatβs cheapest. Like beans, gas and electricity arenβt complex products β so why do the suppliers make it so difficult to understand?
In the meantime, I donβt want to sound negative. I say, well done to British Gas, and itβs not often that youβll find me praising an energy company!
However, it really is just a tiny start β thereβs much more that needs to be done. Itβs great when energy companies respond to our calls, but we canβt expect them to do exactly what we want. Thatβs why we have regulators. We need action from Ofgem, and if it doesnβt go far enough, we need the government to tackle confusing energy tariffs once and for all.