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, we’re 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 Gas’ plans to simplify its energy tariffs. Hooray! With your help we’ve been putting pressure on Ofgem to do this, and getting companies to do it before Ofgem feels like a real success. Unfortunately, it’s not quite that simple.
British Gas announced today that it’s ‘simplifying’ its energy tariffs – it will have just fixed and variable. That’s great – 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 ‘tiered’ structure – 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, Ofgem’s chief exec described tiers as an ‘unnecessary complication’ that he hoped would be ‘flushed out’ by its tariff reforms. 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 shouldn’t 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 – 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 you’re paying, you often have to work out complex discounts that aren’t included in the unit price but somehow separated out – our investigation showed that people find it very difficult to do this.
What do we want?
Well, we think it’s pretty easy – there’s needs to be one simple tariff system. There’d 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.
It’d be like going into the supermarket to buy a tin of beans – you can simply compare the prices side-by-side and choose the one that’s cheapest. Like beans, gas and electricity aren’t complex products – so why do the suppliers make it so difficult to understand?
In the meantime, I don’t want to sound negative. I say, well done to British Gas, and it’s not often that you’ll find me praising an energy company!
However, it really is just a tiny start – there’s much more that needs to be done. It’s great when energy companies respond to our calls, but we can’t expect them to do exactly what we want. That’s why we have regulators. We need action from Ofgem, and if it doesn’t go far enough, we need the government to tackle confusing energy tariffs once and for all.