EDF Energy – we support simple energy prices

Well done to EDF for putting customers first. I think it’s a great idea.

It is going to be an uphill battle trying to win the trust of consumers, Martin. With fuel prices rising fast, it is inevitable that there will be criticism of all suppliers and there is not much that can be done to comfort the customers that have to meet these rising costs.

I hope EDF and other suppliers monitor this and other websites to learn how members of the public view their energy supplier. Not all the comments are negative.

Single unit pricing will be very helpful and until this happens, it is important that customers are told by their supplier if they could save money by switching to a different tariff, rather than waiting for them to ask. I believe that energy suppliers are now required to do this but I am not convinced it is happening.

There is considerable concern about how energy companies are dealing with pressures to move to renewable energy sources, and even more about how much this will cost. There has been considerable investment in wind power despite its intermittent nature and it is fairly obvious that an integrated approach is what is needed to use renewable energy sources effectively. This is perhaps the best example of the need for transparency in the energy supply industry.

The roll out of smart meters has generated considerable criticism on Which? Conversation. This may be driven by government or the EU, but we need the support of our energy suppliers to delay the roll out until the huge cost and concern about security issues have been properly investigated and that the smart meter will still function if they switch energy supplier. In the meantime, I do not see a problem with individuals paying for a smart meter.

My personal hobby horse concerns energy companies keeping customers in credit and this has been mentioned by various people contributing to discussions on this website. For years I have paid for energy by monthly direct debit and this has been routinely increased, allowing me to build up a substantial credit balance. Every time I called my supplier (not EDF) it was easy to get a refund payment or to cancel the planned increase in direct debit, but some people have not been so lucky. All I want to do is provide meter readings when requested and pay for what energy I have used. If this is not an option because of the costs in administration, then I might be prepared to accept this, but no-one has ever told me this. I can appreciate that for some people it would be better to build up credit in the summer months to cover heavy winter use, but some of us would prefer our money in our banks, not in the bank of our energy suppliers.

Thank you for support of the single unit price and for contributing to Which? Conversation. I hope you can spare the time to make further comments and perhaps answer a few queries.

Ok Mr. EDF this all sounds good. Now put your money where your mouth is and just do it.
You won’t win back trust by only talking about it, by just saying what you think consumers want to hear. Actions speak loudest.

I think we have to defy the major energy suppliers not to follow EDF’s lead as a first step. Easy switching is the way to put the power back into consumers’ hands. If just one or two of the majors would sign up to the same policy as EDF the others would probably have to fall into line for commercial and “corporate social responsibility” reasons. After all they can’t keep banging on about how responsible they are, and how they are always putting the customer first, and then ignore such a good example of how they can put words into deeds.

Which? is recognised throughout the UK as the expert body on consumer issues. So if Which? says it is a good thing, then it is a good thing. If Which? says the behaviour of the other energy companies is bad for consumers then they must accept that they are out of line. So long as price collusion is avoided, there will still be competition for our business and there is more – although not much more, I admit – to energy supply than the unit price [like customer service, billing comprehensibility, payment facilities, product bundles] which will enable consumers to make suitable choices.

It was reported on the BBC News website today that “the energy regulator Ofgem said the proposed scheme would not be as easy to implement as it might appear. This was because of the number of payment options and special “dual fuel” packages that currently existed.” I think Ofgem are introducing objections to EDF’s proposal because it does not fit exactly within Ofgem’s template for simplification of energy supply tariffs. There is no reason why the standard unit price – the headline rate – cannot be declared and then customers can attract various offsets or discounts depending on how they pay their bills, how many fuels they take, whether they do on-line meter readings, whether they have a smart meter, whether they sign up for a one-year/two-year/longer term contract, the level of exit penalties, whether they will pay as they consume [so never in credit or debit] or have a standard monthly payment, and so on. There could be competition on these elements so people could easily work out what suited them best. In a previous conversation, one of the regular contributors [whose name I cannot quickly find] suggested that there should be a national tariff adjustment day and that – unless the regulator approved otherwise and universally because of substantial wholesale price changes – no further alterations in price would be permitted for twelve months. I think that would be one of the best things that could be done to protect consumers and establish a level tariff platform. Such controls should also apply to the off-tariff elements that I mentioned above to stop companies making up on the swings what they were losing on the roundabouts. Perhaps it smacks of too much central regulation, but with computerised marginal rate manipulation and a multitude of peripheral prices driving consumers crazy, the suppliers have asked for it.

Ofgem’s proposals for reduced tariffs already include both unit cost only, and unit cost plus standing charge. So EDF is only offering it seems one of these options. It is a smokescreen to suggest that it is too difficult to compare your annual predicted bill if you can be bothered to make the little effort (how long does it take using Switch with Which to check your best supplier and tariff?).
I use above average, like many people, not for reasons of profligacy but for sound reasons. I have made all reasonable energy saving measures but for medical reasons use more electricity and gas for heating. Others have family homes, homes that can’t be well insulated, all variations that have been stated in previous conversations.
All I want is the choice to find the best deal – I do not expect to be penalised because I use more energy than average. And at the moment my best deal has a high standing charge.
Which has never put the counter argument for alternative pricing structurers, but no doubt Ofgem does have reasons for including, for example, a standing charge option. A pity those reasons are not publicised so at least we have a balanced discussion.
I’d also be wary of an energy company coming out in favour of one pricing method and challenging their competitors – they are there to make a profit, not to be the customer’s best friend.
The “big 6” dominating the market is one of the real problems – opening the market to more competition will be most likely to produce better results for the consumer.

I don’t understand why we have to pay a standing charge, that just makes the price higher for low users. Most low users are pensioners on low incomes and can ill afford energy prices, The only acceptable reason for keeping a standing charge is for properties not using any energy but not having the supply cut off. Second homes and empty homes.

Scrap the standing charge and have one unit cost.

I was going to mention my 1.2 litre car and my neighbours 4.0 litre tank. We both pay the same amount per unit for our petrol and that is fair. If I use my car much more than someone with the same size car engine, I will pay more.

A larger household will use much more energy and nobody is subsidising anyone if their is only a unit price,

Well done EDF great to see someone is thinking clearly.
We have changed suppliers twice in the last 8 years, once because a pretty sales lady called and my husband agreed to listen to a sales pitch, the second I changed for £2 a month less. It probably cost more than that in administration charges. I still don’t know if the deal was better in the long run.
Standing charges are a good way to cover your overheads, so meter payments are only for energy production, it would be interesting to see those totals on a balance sheet.

I wont be looking for cheaper deals my calls to the Companies involved them calling me and having to tell lovely people that I no longer wanted to deal with them.

Cheaper bills come only if you reduce energy consumption, by lifestyle changes or by technology. Every home is different in its energy usage, one price seems to me the right way to go. I like the simple easy to read bills.

I am an EDF customer on a fixed tariff until 2014. When I get to that point if two suppliers appear to offer the same charge for my estimated usage and one has a unit price only and the other a standing charge+unit price, I will switch to the one charging by unit price only. The suppliers can and do build their overheads into the unit price.

One price should mean one unit price, and not one unit price + standing charge.

What about your customers who are on off-peak tariffs and rely on electricity for all their needs?

Am I going to heat a house and hot water on standard price electricity?

Or are you going to bring gas into the areas where there is currently no supply?

Well said Martin Lawrence, Managing Director at EDF.I look forward to your company introducing unit pricing only tariffs as soon as possible. If you put into practice EDF will be at the top of my list of choices for my next energy provider..

The latest Ofgem Retail Market Review proposals for comment can be found at:
http://www.ofgem.gov.uk/Pages/MoreInformation.aspx?docid=521&refer=Markets/RetMkts/rmr&utm_source=Ofgem+Website+Mailing+List&utm_campaign=41e31899dc-Ofgem_Email_Alert6_20_2013&utm_medium=email&utm_term=0_a9e586c268-41e31899dc-395487641

For those interested the final proposals from Ofgem are in the document at the following link:

https://www.ofgem.gov.uk/sites/default/files/docs/decisions/the_retail_market_review_-_implementation_of_simpler_tariff_choices_and_clearer_information.pdf

On the controversial question of tariffs and standing charges:
“Tariff structure and surcharges
2.13. Stakeholders were supportive of our effort to standardise and simplify tariff structures. Some stakeholders do not feel the policy goes far enough and have proposed we consider removing standing charges and adopt a single unit rate structure. While our policy requires suppliers to adopt a standing charge and unit rate structure, we do not specify the level of standing charge and consequently any standing charge can be zero. Ofgem does not regulate prices in the retail energy market, and therefore the level of any prices results entirely from the commercial decisions of energy suppliers. Suppliers have fixed costs which they may look to recover through a standing charge. However, given the level of demand for low or zero standing charge products, in a competitive market we might expect such tariffs to be offered.
2.14. One respondent expressed concern that if wide proliferation of standing charges occurs it may undermine tariff simplicity. Whilst a wide proliferation of standing charges may work against what we are trying to achieve in terms of simplicity and comparability, we consider the potential for this to happen is significantly limited by our proposals to introduce a tariff cap. Moreover, there are benefits if consumers have a degree of choice over the standing charges to which they are exposed. This, in part, is why we are not proposing a range of rules around the standing charge element of our proposed revisions to the tariff structure. As with other areas of the package, we will monitor market developments and do not rule out taking steps to introduce further remedies in the event that there is evidence that more needs to be done to protect consumers and improve competition.”

And on communication
“Cheapest Tariff Messaging (‘CTM’) provides consumers with personalised information on how much they could save by switching tariffs with their current supplier. This is designed to improve consumers‟ awareness of the savings available from switching and prompt them to consider their options.”
which, of course, may also give the customers sufficient information to help them shop around – to see if other suppliers can offer a cheaper annual bill.