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We’re calling for radical action for fairer energy tariffs

The inside of a pylon at sunset

Our executive director, Richard Lloyd, says Ofgem’s proposals for simpler energy tariffs do not go far enough. The Prime Minister’s promise for fairer energy bills will fail without more radical action.

Ofgem’s proposals for simpler energy tariffs, backed by the Prime Minister, are a welcome step in the right direction.

But they do not go far enough to keep prices in check, at a time when spiralling energy bills are consumers’ top financial concern.

Which? believes that the government should take more radical action to provide not just simpler, but fairer tariffs.

There is a real danger that these proposals will fail to live up to the PM’s promise of fairer bills because of the lack of competition in this market. There is nothing in today’s proposals to stop customers simply being put on their current suppliers’ ‘best’ uncompetitive deal.

Keep prices low with effective competition

Prices will only be kept as low as possible if there is more effective competition and switching between energy companies. For this to happen prices have to be presented in a clear, consistent and simple way, through a single unit price, so people can readily identify the cheapest deal for them – not just with their current supplier but across the market.

Consumer trust in the energy industry has plummeted, so the government must act to give consumers the confidence that the price they’re paying for their energy is a fair one. If these proposals have failed to fix our broken energy market by 2015, the government must step in and guarantee a fair price for all.

Comments
Member

Richard, I have never had any problem finding the best energy deal as, like many, I look at the switching websites – including switch with Which. All that matters to me is the total annual bill. And I do understand the way the bill is made up – not that it is necessary.
I happen not to agree with a single tariff because I do not think that represents the market properly – oversimplification may well be counter-productive. But I don’t want to argue this as others have differing views, and quite right too and its been thrashed around (and still is being). Ofgem have presumably consulted widely and I assume Which has had its input. However at some point we need a consensus to make progress – there is no right or wrong solution so we will all have to make some compromises. So let’s just get on with introducing an improved system.
Incidentally, we still have prices that are lower than many other European countries – not often mentioned, it it?

Member

Please carry on this campaign, Richard. It affects almost everyone in the UK.

Some people keep a close eye on fuel prices and switch suppliers to ensure that they always benefit from the lowest price, some do this occasionally, and some have never switched for one or more reasons. What about those who do not use computers? What about the disabled? Should the disabled be expected to pay more for energy? Let’s play the disability card to persuade the government of the need for simple unit pricing.

To have simple pricing, we need to get rid of standing charges. We need to get rid tariffs that have price bands that achieve the same as standing charges. We need to get rid of discounts etc. that make it difficult to compare prices offered by different companies. Ofgem, the regulator, wants to keep standing charges. I think we should treat Ofgem like a faulty regulator on a boiler and get it fixed as soon as possible!

Which? advocates having simple unit pricing that can be compared easily like petrol prices. None of us pay a standing charge when we visit a filling station. All the overheads involved in providing fuel are included in the price per litre.

My remarks refer only to domestic energy. It makes sense for commercial users to continue to negotiate prices with suppliers.

Member

Hang on! Why are the disabled expected to pay more for energy?

Member

You are able to find the best energy deal, Richard. That’s great, but spare a thought for the disabled who don’t share your abilities, and the elderly who can no longer cope well with financial matters. It’s not just the disabled but many elderly people and those without computers who do not shop around.

Member

Sorry, that should say Malcolm instead of Richard.

Member

It is in no-one’s interests to oversimplify and distort a market. What matters is to ensure that those who do not have the means or the faculties to do it for themselves are helped to do it in other ways. So let’s address that issue. It applies to many areas apart from energy – tax, savings, benefits claims, disabled allowances. i would suggest these are far more complex than understanding energy and deserving of help and advice for the less capable.
I don’t believe the elderly and disabled should be condemned as incapable of organising their affairs well – unless they are in decline of course. They are as representative as anyone, and the elderly often have the benefit of experience and judgement over less mature people. I think it is a little disingenuous to attempt to play the sympathy card. I am not so young, and have a disabled family member and I can assure you we have all our faculties. So let’s keep this factual and not emotive.

Member

I absolutely agree that some of the elderly have better experience and judgement in financial matters. They are usually aware of the perils of living in debt, unlike many younger people. Through working for a charity I know that it is vital to speak first to the person rather than their carer, since having a disability does not necessarily imply a lack of mental capacity.

For Which? to have started a campaign for simpler and fairer energy tariffs, there must be good reasons. The various Conversations have provided me with an insight, and I support the campaign. I recognise the needs of energy companies to make a profit and invest for the future, but is fairly evident that businesses providing public services need to be regulated to ensure that the public is treated fairly.

As you say, helping the disadvantaged with financial matters is much more complicated than energy tariffs, but that is another problem to be addressed.

Member
D Clarke says:
22 February 2013

I worked for a distribution company and was made redundant in the effort to keep costs down, yes we were paid well for working in all weathers, bank holidays 24/7 I think the public forget how much money it costs to maintain the electrical infrastructure. Everyone expects power to be there at the touch of a button but forget how the aging network needs maintaining, but at least we have the power when we need it ….. at the moment.Unless the public allow the industry to build new power stations, in a couple of years, expensive bills bills will be a thing of the past, because supplies will be disconnected on a rota basis due to a lack of generation capacity. Wholesale prices will continue their upward trend, it’s a finite resource like petrol, better looking at a wind farm etc than sat in the dark.