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Ever been confused by an energy tariff? You’re not alone

Man confused by bills

Our latest investigation reveals that while Ofgem’s new rules for standardised energy tariffs are a step in the right direction, most people still find them confusing.

Most of us know that understanding your energy tariff is the key to comparing prices. And you probably wouldn’t make any other purchases worth well over £1,000 a year without first checking if you could get a better deal.

So surely it’s good news that energy regulator Ofgem has this year brought in new rules on how energy tariffs are structured? Not as much as you might think, as we found when we put the new energy tariff rules to the test.

Tariffs still confusing

In our most recent experiment, we challenged 505 people to spot the cheapest deal using the standard tariffs of the big six energy suppliers (British Gas, EDF, E.ON, Npower, Scottish Power and SSE).

We found that only a third of people picked the cheapest deal when tariffs were presented in line with Ofgem’s new rules, where tariffs are made up of a unit rate and standing charge.

Of the rest, three in ten picked the wrong tariff and a third either didn’t think it was possible to calculate or didn’t know how to.

Fix the Big Six

Now the results of our latest investigation are better than when we ran a similar test in 2012 on the old-style energy tariffs, when just 8% of people could pick the cheapest deal. But clearly it’s still not good enough that the majority of people failed.

Previously, energy tariffs were a bit of a free-for-all, with some made up of a standing charge and unit rate, others just of a unit rate and others of two tiers depending on how much energy was used. There was also a variety of discounts and rewards, expressed sometimes in pounds and other times in percentages, which added to the confusion.

So while the new rules have helped, our results show efforts to simplify tariffs have simply not gone far enough.

That’s why we have launched our Fix the Big Six campaign, calling on the Government, Ofgem, competition authorities and the energy companies to drive forward radical reforms to fix the broken energy market, including simpler tariffs.

We want to see an energy market you can trust, where you have the power to spot the best deal using simple, easy-to-compare pricing.

So what do you think about how energy tariffs are presented? How could they work better for you to easily compare energy deals?

Alsop says:
14 March 2014

One thing the big six do right is they display all their tariffs on their main web site so you can work out how much it will cost to chnrge,standing charges & cancellation fees.
However the smaller companies like extra energy, ovo etc do not.Even if you phone them they cant quote you the tariffs for your area.
You have to get a quote and you have to put your name address etc to get the quote if you dont go with them you get e mails etc asking you to move to them.
ALL enegy suppliers should be made to put on their web site a table of charges including tariffs,standing charges and cancellation fees.
So this must change as well


From a Conversation published last September: “This bewildering array of charges is yet another example of how the energy market’s too confusing for us to find the best deal. That’s why Which? has been calling for simple tariffs, without standing charges, displayed in the style of petrol forecourt prices, so that we can all easily spot the cheapest deal.”

I am glad that Which? is continuing to pursue the issue of complex energy prices but very disappointed that they seem to have stopped pushing for simple tariffs without standing charges. Not only do standing charges cause confusion but they mean that those who use little energy are subsidising those who use more. Ofgem has allowed energy companies to offer tariffs with no standing charge but the unit price is higher, so that they are often a more expensive option.

The fairest way is to get rid of standing charges and have simple prices that can be compared, just as we compare the cost of petrol or a loaf of bread.

Some people compare the cost of electricity and gas regularly and switch to ensure that they are always getting their energy cheaply. Many don’t do this regularly for various reasons, and it is too difficult for a significant proportion of the population.

It is time to consider those who struggle to pay their bills. Come on Which? and continue the campaign for simple unit prices and no standing charges.


I entirely agree. It is my endeavour to be at ease with utilities, as I am sure most people wish to be. I can’t stand the constant manipulation of tariffs but I am not prepared to keep on doing a comparison exercise to see if switching would make a worthwhile difference. Every switch costs the industry money and causes the householder a degree of inconvenience with more correspondence, bills and junk e-mails. The government seems to want us all to be at it all the time whereas what it should be promoting is a fair, consistent and transparent price structure. The only benefit I can see from competition among the major suppliers is that it squeezes out administrative and service inefficiencies [the bane of the old regional gas and electricity boards]. Even the simplified tariffs are more complex than they need to be with contract terms, exit penalties, fixed-rate deals, and such. It’s all become a gamble and we just don’t need it. The differential costs of energy transmission and supply don’t have to be translated into standing charges. I think I’ve said before that there is a case for every property paying a basic standard meterage charge set by the Regulator across the country but after that it should all be priced by consumption.


Thanks for making the point about the cost of switching, which all customers have to pay, whether or not they are the ones who are doing the switching. I trawled through earlier Conversations but failed to find a post where there was an estimate of the switching cost.

Everyone needs energy, so I believe that the energy suppliers should be under much greater control than most companies.

james says:
14 March 2014

forecourt pricing is not the panacea you think it is. customers will still need to know how many kwhs of electricity and gas they use to work out the cheapest and this lack of knowledge is half the problem.

the other problem with forecourt pricing is that people with second homes will be subsidised by people with families or the elderly or ill who heat their homes all day to the tune of £100 to £200 per year.


James – One of the advantages of simple unit prices is that no-one has to estimate their energy consumption. I don’t have to estimate how much diesel I use to decide where to buy fuel for my car.

We have well established ways of supporting those who have genuine need. I agree that those with second homes should not be subsidised but it is not difficult to see workable solutions.

With a standing charge, low users are subsidising high users, which is not fair. The complexity of current pricing demonstrates that the energy companies and Ofcom are doing little to help those who are not up to finding the best price.


Sorry, I do not understand that point at all. Why are low users subsidising high users? Standing charges reflect the fixed costs of supplying energy to a household, independent of the level of consumption. Even if you consume almost no energy you will still have those costs by virtue of having an active connection to the network.

A significant part of the fixed costs are due to the network providers and transporters like National Grid and Transco. They charge the energy providers for the use of their networks so part of the standing charge is passed on to them.

Supply of energy to your house is not directly comparable with filling your car with fuel (unless you’re referring to an electric car). Until you have a petrol supply pipe running to your house or you can take your house to a energy station for a top-up, then the comparison is misleading.


Standing charges have nothing whatsoever to do with the costs of supplying energy. If they did, the standing charge would depend, for example, on whether you lived in a densely populated area or in rural areas.

The costs of distributing petrol are included in the price per litre, so that the price is the same, irrespective of how much fuel we buy. That makes it easy to compare prices.

In the UK we have people who are really struggling to pay their fuel bills. They are low users because they have no choice. Thanks to standing charges they are paying more per unit than profligate users.

What I am suggesting is that we should consider those less fortunate than ourselves.


That’s exactly what standing charges do do! They vary across the country. Suppliers do not charge the same amount across the whole country – your location is a significant factor in the costs.

Standing charges were common practice before the suppliers were privatised but were then increasingly replaced by tiered products. The first tier was more expensive to reflect the costs of supply but of course did not prevent customers reducing there bills to a low level by restricting their consumption. Standing charges are now back in use again because they were mandated by the government as part of their simplification drive.

Energy suppliers have less control over distribution costs than oil companies – they cannot choose which distributor to use and they cannot own the distribution network themselves. It is really more complicated than the supply of petrol.

Suppliers provide a lot of help for struggling consumers by running schemes like Warm Home Discount aimed at customers receiving Pension Credit or other benefits. Surely this is a fairer way to target help where it is most needed?


There is not much the suppliers of gas and electricity can do to add value to their basic product in order to attract customers and increase sales. It’s not like a kettle which might boil faster and have a merry whistle, or a toaster that might have a streamlined appearance and a nice colour to complement your worktop. It’s gas, or it’s electricity, and that’s about as fancy as it gets. What the companies can do is wrap it up in tariff packages and sell it by the bundle. That’s why we have standing charges and all the other bits and pieces that marketing people drool over because such devices are good for bamboozling the customers, especially if you can lock them in a contract term. If there were any geographical, transformer siting, or pipeline location issue at the back of standing charges, all the standing charges from all the suppliers in a given district would be the same, but they’re not. If standing charges were a sensible commercial way of recouping infrastructure costs the petrol station operators would charge you just for entering the forecourt and wiping your hands on the paper towel before you even drew a teaspoonful of fuel from the pump; alternatively, the price would taper downwards the more you put in your tank. This is a small country. In the big picture, there is no great variation in costs, and even if there is, it doesn’t matter – equality of treatment is more important. We have a universal postal charge so we can have a universal connection or meter charge, set [like the postage rate] by the Regulator. Then the energy companies can concentrate on customer service [some scope for uplift there I should think] as the key market discriminator, and if they want to help the poor and needy of their own volition, unprovoked by political interference, they can do that by themselves and then even the pensioners and those on income support could pick and choose whose gas they want.


In a typical dual fuel energy bill of £1128 you are paying for more than just raw energy – which is only around 40% of your bill, or £450.

The rest of your bill pays for:
– the infrastructure to deliver the energy (pipes and wires, storage etc) – around £295
– suppliers’ costs (meter costs, staff to buy energy, bill you, admin, buildings, profit) – around £188
And government “charges” – carbon tax, supporting low-carbon technology, improving customer energy efficiency, supporting vulnerable customers, and VAT – around £194.

If you have a single tariff then the more energy you use, the more you will pay towards the supplier’s costs and to the government charges. Is this fair? Because it is a fallacy to suggest that all users of more energy are capable of giving more financial support to these non-energy elements. Many will be the elderly – who need more warmth and are at home all day; larger families with less disposable income in larger houses; less well-off families in houses that are poorly insulated, difficult to insulate, and without the means to improve them; those with medical needs needing round the clock warmth and using appliances consuming power; people in poor-quality rented accommodation and so on.

We need a more thoughtful approach to this. For example, why tax gas and electricity? It is as essential as food and we don’t tax that. Why not take out the government charges and put them into general taxation, where those with more means can fund them.

Which? Is being a bit misleading in these conversations in not presenting all the facts in a balanced way – rather it is pursuing a blinkered mantra. It should adopt an impartial, objective and constructive approach that does not lead to a great many consumers, vulnerable and poor, being unfairly disadvantaged.


“we challenged 505 people to spot the cheapest deal using the standard tariffs of the big six”.
I would be interested to see the tariffs these people were shown that gave such poor outcomes.

Checking your best deal – and other competing ones, because you may choose customer service over price – is extremely easy for many. Just use the Which? Switch to calculate your bill.

I wonder how these failed candidates get on filling in their income tax return, working out a household budget, applying for a mortgage, dealing with benefits – some of the many things you may need to deal with in your life. Maybe it is more of a condemnation of a poor education that we have to oversimplify everything because we believe so many are incapable of accomplishing these tasks. I don’t believe the British Public as a whole are that dumb. I hope I won’t be proved wrong!

Dave b says:
21 March 2014

Theiffs were shown in the full article in the printed magazine and were:
Npower. Standing charge 0p/day, unit rate 17.105p/kWh;
SSE. £60/year, 13.99p/kWh;
E-on. 16.422p/day, 13.871p/kWh;
Scottish power. 27.39p/day, 13.805p/kWh;
British Gas. 26p/day, 12.27p/kWh;
EDF. 18.9p/day, 13.550p/kWh.
I had three thoughts about the findings.
I was amazed at the error and “not possible to calculate” rate. The calculation should not be beyond anyone.
The Tariff Comparison Rate will as the article suggests lead to more rather than less confusion.
Shocked that no mention was made of smart etering. Already one supplier has promised free energy on Saturdays. Smart meters offer rates that vary by the season, day or hour. If we as a nation cannot cope with a standing charge and a unit rate, smart meters will make comparisons utterly impossible. We do not, after all, buy our household energy at spot prices as we do for petrol, and even with smart metrs we won’t be free to do this (buy at the cheapest RIGHT NOW). Instead we will have tariffs that simply cannot be compared even by an expert.