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Lack of competition in the energy market costs us billions

Fair energy illustration

Our latest analysis of energy prices suggests bills could have been slashed further and sooner than the recent round of cuts. Do you think you’re paying a fair price for energy?

The Big Six have each announced price cuts to standard gas tariffs of up to 5.1%. We weren’t convinced these cuts went as far as they should, so we analysed movements in energy prices. You may not be surprised to hear that we found the price you’ve been paying hasn’t been in line with falling wholesale costs. But by how much?

Energy price cuts don’t go far enough

Using real market data, we analysed the cost to suppliers of buying wholesale energy since 2013 and compared this against what you’ve paid in the same period. We found that the failure of retail prices to align with wholesale costs has cost consumers £2.9bn over the last year – that’s £145 per household on standard energy tariffs.

Despite the recent cuts to gas prices, we think they could have been slashed by around 8.8-10.3%. And electricity prices should have seen a reduction too, by up to 10%.

We also see no justification for the price hikes in late 2013 – if they hadn’t gone up customers could have saved £421m on gas prices alone.

Energy price rises

Energy market investigation

All of this places a massive question mark over how suppliers have been setting prices over the last two years. We have submitted our analysis as fresh evidence to the ongoing Competition and Markets Authority investigation into the energy market, and to HM Treasury for its more recently announced inquiry into oil prices.

As part of our Fair Energy Prices campaign we want the CMA enquiry to establish once and for all whether the price we pay is fair and set out radical reforms to ensure the energy market works for consumers.

So what are your thoughts on this? Do you think we’re paying a fair price for energy? Does the CMA need to examine this as part of its energy market investigation? Over to you…

Comments
Profile photo of wavechange
Member

It is very difficult for consumers to know if they are paying fair prices for anything. Sometimes we can see evidence of a problem, such as when a supermarket has a special offer after substantially increasing the price or a large pack is poor value compared with a small one. Usually we are guided by what others say.

Kate has provided a link to the petition about fair energy prices, where we are asked to sign up to reach the target of 100,000, but the number that have is already well above this target. There’s also the petition to ‘fix the big six’. Two campaigns related to energy. We can see for ourselves that as with petrol prices, suppliers are quicker to raise prices than they are to drop prices in response to fluctuations in the price they pay.

The way in which energy is sold provides me with the biggest clue that something is very wrong. In recent years we have been offered a bewildering range of tariffs, sometimes with incentives to further confuse matters. My previous supplier offered Tesco Clubcard Points. Then there are fixed price tariffs, where the we save money if the price goes up. We are being invited to gamble over the price of energy.

It is utterly ridiculous that we are expected to put information into websites to work out whether or not to stay with our existing supplier of gas and electricity or move to another one. Or maybe get gas from one supplier and electricity from another, to save money. Or sign up for a collective switching scheme, like I did last year. Many do switch supplier regularly. I have switched prices only twice since privatisation, though I have compared prices more frequently. The first change was easy and the second a bit of a nightmare. I would like to know how much switching is costing the consumer. No doubt part of these costs are met by those who have not switched. I would like to know why many people stay with the same supplier for years or have never switched since privatisation introduced competition and crazy complexity.

There is snow on the ground this morning and the boiler has been working overtime. I can cope with my energy bills for the time being. What concerns me is how energy prices are affecting those who are really struggling to make ends meet. Are they logging on to price comparison websites? Maybe not if they don’t have a computer. If energy suppliers published simple unit prices for energy, anyone capable of deciding which brand of cornflakes was best value for money would be able to choose between suppliers.

It really is time to start thinking about how we help those who are – for whatever reason – paying over the odds for their energy. We all need energy and I believe that the government should control energy prices. Many have suggested that energy is re-nationalised. I can understand that point of view, but perhaps a better way forward is to take advantage of companies working in competition with government control of pricing.

Member

There are a few problems with having utilities under national ownership:

1) there is less focus on cost – several studies in Australia shows that the costs of energy networks in states that kept public ownership (NSW and QLD) are significantly higher cost – whether looking at running costs or when investing in assets. National Grid in the UK will invest £20bn pounds during its currently regulatory period. Not only is that likely to be done on time and under budget, the cost savings will also be shared with consumers under Ofgem’s new regulatory regime. Can anyone think of a government £20bn investment scheme that has delivered similar results?

2) Competition does give a focus on customer service. The big six have scored poorly but there is a reasonable amount of differentiation amongst them. E.On in particular stands out of late in making big improvements (USwitch survey’s show this more clearly). New entrants all have the best customer service – is that a surprise? You can’t win customers if you treat them badly.

2) Competition does bring innovation. Whether it is Hive or Nest, or a whizzy app (see reviews of British Gas’s app here: https://itunes.apple.com/gb/app/british-gas/id340473961?mt=8). The high street banks are not a fantastic example of innovation or customer service – but compare the experience of walking into a bank branch these days with a big post office.

On government controlled prices, are you confident prices will be set to reflect costs? History suggests, prices can be used to buy votes or to raise taxation through indirect means (fuel duty anyone)? Few have heard of the current government’s carbon price floor which imposes a top up tax on all carbon dioxide emitted by the power sector (it gets passed through to bills like all costs). Last year it raised over £1bn for the Treasury.

Lastly, I agree we should all pay a fair price for our energy and the vulnerable need to be protected. However, keeping the price of things artificially low so that it is affordable for the vulnerable is very expensive way of going about things, as paying for subsidies for the non-vulnerable quickly gets into large numbers. For the same pot of money, a targeted scheme (whether direct payments or free energy efficiency solutions) would give a much bigger benefit to those who need it most.

Profile photo of wavechange
Member

I am not supporting re-nationalisation of energy supply, RTA. I very much agree about the need for innovation. Unfortunately, privatisation has gradually brought some problems, so pricing is complex and it is difficult to know if we are getting good value for money. I am also not happy about the extent to which our energy supply is in now under control of other companies and the extent of investment on wind power, when it is obvious that we need a more diverse approach to renewable energy.

I am not suggesting subsidies other than protecting the poor from being hit to a greater extent than heavy users by standing charges.

As you say, there are risks with government having influence on energy prices but not many people seem to have much confidence in the present situation. What I am seeking is simply a way to stop companies making excessive profits. They are not charitable organisations, nor should they be.

Member

I think we can all agree that trust is the big issue and regaining it would solve most of the problems.

I would point out that the present climate appears to assume all the big 6 are all guilty. I find it amusing that it is the big 6, not the big 5 – poor EdF has not made a profit from energy supply since public data started being disclosed in 2009. If it is good to be suspicious of the big six, surely it is good to be suspicious of those accusing them too, even Which?. There is plenty of good that campaigning has done (improving customer service, more public awareness, etc.), but Which?’s energy campaign appears to me to by far its most successful in grabbing headlines. Given the boost to its profile, is there a danger it continues to cry wolf when the moment has passed and it is time to move onto other more worthy but perhaps less media friendly issues?

The good news is that CMA should report mid year on excessive profits and competition and all. I hope that starts the process of rebuilding trust.

On complexity, there is tendency to blame tariff proliferation for a lack of trust. However, all consumer services show that the large majority knows how to switch and when they do so they are confident in their choices. Research in the railway area shows that customers dislike tariff complexity, but when asked if they would prefer a move to flat pricing with no chance of saving money (booking ahead, travelling at really low demand times), they firmly reject any simplification. I’ve seen enough variety of opinion on Which?’s discussion boards to see that some hate standing charges while others don’t mind them. Others love paper bills, or apps, or credit interest on their balances. One size rarely fits all. Tariff simplification means giving up choice.

Profile photo of wavechange
Member

RTA – The comparison with railways is useful and something we can all relate to. As you say, different consumers find it difficult to cope with a diversity of tariffs yet may complain if what they want is not available. I am fed-up not being able to pay for what energy I have used by direct debit. That’s simply because I have had years of building up excessive credit balances and having my direct debits increased when there is demonstrably no need. That would not suit those who prefer to budget for a fixed monthly payment.

Some time ago I found out that many people rarely switch supplier and some have never done so. I know some of them and the reasons are varied. In some cases they are old and decrepit or have health problems. Fortunately everyone I know in this situation is, to the best of my knowledge, quite well off and living in their own home rather than in rented accommodation. Not everyone is so fortunate.

I was quite surprised how much my current insurer charged for arranging my new home insurance. I wonder how much switching energy suppliers costs – max, min and median. My last switch was a nightmare, exchanging emails and phone calls. I’m sure it’s not typical but it can happen. Changing tariff with a supplier – as mentioned by Malcolm – should not be expensive.

The energy companies will have to do a lot to regain my trust. I see a need for more public consultation involving the many who don’t have much of a clue about energy supply. Maybe if supermarkets sold energy it might help people to engage with looking for better prices. They have certainly made an impact in other areas previously dominated by specialist companies.

Profile photo of malcolm r
Member

“Maybe if supermarkets sold energy”. Co-operative, Sainsbury, M&S currently, but just agents for others. All the small “competitive” companies seem even pricier in my area than the big ones. I’d like to see a genuine co-operative (as opposed to the Co-Op) energy company with customers as shareholders able to share profits.

Profile photo of wavechange
Member

Thanks Malcolm. I did know about M&S but not about the others. I should have said I was thinking more about services available in supermarkets rather than online. There are still many who are more comfortable with face-to-face contact or do not use computers, at least for financial transactions.

Perhaps supermarkets could market energy in the same way that insurance brokers select the most appropriate cover, at least for the companies on their books. Customers might have to bring along their recent bills but as you have pointed out, it’s not too difficult for someone to do a price comparison online. An after-sales service would be needed in case of problems and it’s unlikely that a supermarket would provide personal service free of charge.

Profile photo of malcolm r
Member

Like we have financial advisers, should we have energy advisers to whom we entrust our account? Working for a fee of course – no commission. OK – tongue in cheek a bit. but, like many things in life where we are either lacking in knowledge or facilities, lacking in will to make the effort, or don’t have the time to do it ourselves, we pay a fee for others to do it for us. Maybe “household advisers” who handle all our essential negotiations – energy, banking, breakdown cover, car and house insurance, mortgage, benefits – who have the skills to get the best deals to save us money.

Profile photo of wavechange
Member

I was going to mention IFAs but thought it would be simpler to use the insurance broker as an analogy. There is certainly scope to go further, but helping people try to secure lower energy prices for a fixed fee could be a good start. Little expertise should be needed unless something goes wrong.

Profile photo of RMawson
Member

What about the Government capping profits? Surely that is the way forward and the Control Authorities could determine if any cheating is going on when the Companies are audited. Any profit over the capping would be paid back to customers.

Profile photo of malcolm r
Member

Bob, most of the government have studied PPE and never taken part in the real world, so do not understand business and how they can manipulate accounting to minimise apparent profit and tax liability. They would likely make a mess of it, deter investment and use it for political gain (“freeze energy prices – a bit laughable when they fall, as now). I’d rather see real competition – that is what gets down to fair profits. The problem is the time it takes to investigate and make recommendations, by which time its all history.

I think apart from real competition we need Ofgem to become competent enough to publicise exactly how the energy market works, and to act quickly when, as Which? has pointed out, they seem not to follow energy prices. And I’d like to see a consumer-owned co-op where we get a profit share back. then the other companies might change their ways?

Profile photo of malcolm r
Member

Ofgem and the CMA should have full knowledge of the wholesale cost of energy, Ofgem control the cost of transmitting this energy, Govt controls the costs of the add-ons such as social and environmental costs, smart meter roll-out costs. Ofgem also look at margins and supplier operating costs. So why is it so difficult for them to decide the “fair” cost of our energy bills? Are they not competent to gather and handle this information, or are they held back from using it?

We must remember that in a current average domestic energy bill only around 44% of what you pay is for the actual fuel you use. 23% is for transmission, 7% environmental and social, 5% VAT – more or less costs determined by world prices and the government. The remaining 21% is in the energy companies hands – operating costs and profit.

I’d like to see Ofgem construct a “model” supplier to show just what a fair bill should be. We could then judge our supplier against that model and see whether we are being charged properly. Energy, like food and housing, is too important to be left to a reactive regulator – I want it to lead the way.

II’ve counted 34 domestic energy suppliers on the UK market. Many of these are smaller companies and newer entrants. You would think their business models would make them much more competitive – but in my experience none of them in my area come anywhere near the Big 6 in price. What is going on here – are they just profiteering? And if you want to find out their tariffs, how could you do it easily without internet access?

Member

Ofgem does publish such a study. It’s called the supply market indicator:

https://www.ofgem.gov.uk/publications-and-updates/charts-outlook-costs-make-energy-bills

It tries to show the make up of bills although the methodology is debated.It does show expected profits of a typical supplier who has hedged forward electricity and gas. It does show profits rising to some £100/per customer.

Historically, the indicator has been inaccurate for a number of reasons. It will also be a surprise for most industry followers if the big six come anywhere close to reporting £100/customer profits in 2014. That’s most because of the warm weather that had a dramatic impact on consumption. It would equate to a margin of almost 10% whereas most companies would be happy with 4-6%.

While it is good to maintain a high level of scrutiny on any sector, it would be useful if those making accusations (such as Which?’s persistent use of “billions of pounds of savings / overcharging”) compare them against the data. The data for 2009-13 show that the big 6 made a range of profits – the low point in 2009 was an aggregate of £221m, the high point in 2012 of £1190m (Ofgem data from audited company accounts). Those are big numbers but not “billions of pounds” of excess profits that should easily come back to consumers if only competition was working better.

Profile photo of malcolm r
Member

RTA, I have drawn attention recently on a parallel conversation to Ofgem’s SMI. I think it helps people understand that energy bills are not just “energy”. In fact 56% is not.

However, what Ofgem have done is publish an average bill make up from the “Big 6” – reflecting what they are currently doing. What I have suggested is that they should also take their own look at what they would regard and justify as fair costs for wholesale energy, transmission charges, company operating costs and margin – what I’ve described as a model company (not an average of the existing ones) – to show us whay they think fair charges should be on our bills. We can then judge existing suppliers against that benchmark.

We, the consumers, need to see that there is a fair basis for our bills.

I agree there is too much headline-grabbing without putting balanced arguments behind the hype. We should be treated as intelligent consumers capable of making judgements, but need the information to be able to do that. Energy is too important for it to be dealt with behind closed doors.

Member

Apologies – I didn’t quite get your previous point.

However, I wonder what exactly Ofgem would be giving an opinion on.

1)Transmission and distribution charges are regulated. There are the same for all suppliers. No hedging forward or other strategy will impact this. As Ofgem regulates these charges, it’s opinion is probably going to say they are fair.

2) For wholesale energy costs, Ofgem would have to choose a hedging strategy – maybe it could offer various model companies with different strategies. I don’t think regulators are any better than the rest of us at forecasting future changes in commodity prices.

3) Ofgem has never run a supply company so its perspective on operating costs are limited to what data it can gather. To be fair to your point, I’ve not seen any effort to compare costs to other supply sectors although in its CMA referral it did suggest there had not been enough competitive pressure on costs. Costs though can be very different: bad debt costs are zero for pre-pay but an issue for those billed in arrears; paperless billing saves money, as does having customers inter-act only by the internet; smart meters will mean an upfront investment but significantly reduce meter reading costs and customer bill queries. Importantly, service levels can be very different – no frills compared to premium service – and will bring different costs. Competition if it works will mean there are companies out there trying to fit into every niche.

4) What’s the companies strategy / life cycle position? British Gas invests heavily in its brand and aims to sell service products as well. Utility warehouse wants to sell you everything. If you are a new entrant, you will have to be super competitive to win customers. Marketing costs will be high. You will also lack scale and costs may be higher per customer as a result. New entrants in today’s market have not made a profit for several years, and will expect decent profits ahead to pay for that investment. To say low profits or losses today is a benchmark for incumbents is as wrong as suggesting high profits in the eventually successful new entrant’s recouping phase would be justified for the big six. Ofgem did once opine on acceptable levels of profits but the range it gave was wide and it has been very silent on the issue since.

Profile photo of malcolm r
Member

I would like Which? to publish the details of this research (I haven’t found it – perhaps they would point the way). It is essential consumers and regulators see the facts, or the basis for arguments, so a proper unemotional resolution can be achieved. I presume they have also passed all the details to Ofgem and the CMA as material relevant to their activities?

I do note that the “overcharging” seems to based on “standard variable tariffs”. These days, when “fixed tariffs” have, in the main, no penalty if you change early, I see no reason why anyone should be on a standard variable tariff. In fact, I think they should be abolished and people put on the companies cheapest no-penalty tariff – by default.

My supplier’s variable (standard) tariff is between 26% and 29% more expensive than their fixed tariff. A switch now would save an average user £253 a year.

Which? Why not campaign to abolish standard tariffs and put customers on the current cheapest tariff as well as pointing out the overcharging based on wholesale costs?

Member

Fixed tariffs have their attractions but while they give peace of mind during their term, there can be a sudden jump or fall when you re-tender. It would be interesting to compare whether locking in fixed price deals has meant bigger bill jumps than otherwise – I’ve not seen any data on this one.

Like all fixed deals, timing is everything. If you’re unsure whether you’re picking your moment (and the last 12 months have shown how much fixed deals can move up and down), there is no real reason why the differences between fixed and standard variable tariff shouldn’t equal out over time (as long as commodity prices don’t always move in one direction).

Profile photo of malcolm r
Member

RTA, currently you are not locked in to many fixed price deals – my point.. You can leave for a better one without penalty, which is what I do if prices fall, or stay with it if they rise. You can then pick the best deal from your existing or another provider. They allow you to shop around for the cheapest energy, just as you may do with other purchases. i’ve changed 3 times with my present supplier as prices have fallen to save around £130 over a year. Little effort – just accessing my web account and selecting the better tariff.

Member

I just don’t think there is a free lunch here.

A variable rate tariff is a forward hedged product. Fixed price deals are a hedged product. Overtime, they will equal out if they are hedging on a similar length.

It appears different if you can keep switching (i.e. break the hedge when appropriate). You get the free lunch if you get someone else to pay for the expensive energy that has been procured on your behalf – but who is going to pay? If everyone kept switching fixed price deals they would be priced with a premium for such a risk. Either that, or the unlucky provider would go bust and all remaining providers would think hard about risks and require a higher margin in future (exactly what happens in insurance).

Perhaps put differently, there is a free lunch today because more active customers switch away from the standard variable today and leave the less active customers on it who pay. However, by their act of switching, suppliers are put under pressure to be keen in their pricing on the standard variable tariff so as not to loose to many customers, so even this is not without its merits.

Anyhow, suppliers I have talked to say that in customer surveys a significant majority want to remain on the standard variable tariff and don’t want to move to fixed price deals.

Profile photo of malcolm r
Member

RTA, I am astonished at the claim that customers “want to remain on a standard variable tariff” given that it is the most expensive, and that fixed price deals are usually penalty-free cheaper options. Customers who say this need educating, probably by their supplier, instead of allowing them to remain “cash cows”. A bit like my annual discussion with the AA to agree a premium nearer the on-line offer – usually around 30% less than they initially ask for. But those who don’t bother end up paying for it.

Variable tariff income will no doubt boost profits, and allow knowledgable customers cheaper “fixed” tariffs. If variable were abolished then fixed would increase in cost to make up the margin.

Profile photo of Patrick Steen
Member

Hello everyone, here is our full analysis of energy costs as a PDF report: https://conversation.which.co.uk/wp-content/uploads/2015/02/Which-Analysis-Wholesale-costs-and-retail-prices.pdf We’ve added it as a useful link.

Profile photo of wavechange
Member

Assuming the interpretation by Which? is correct, the companies have some hard questions to answer. If the government controlled the price of domestic energy we might be better served.

Profile photo of Beryl
Member

Thanks Patrick. Its a relief to see some actual price figures.

Profile photo of malcolm r
Member

Patrick, thanks for publishing this informative report. It is just this kind of detailed approach that is needed. I hope it gets a quick response from the energy companies (they usually do reply to Which? criticism promptly) but more importantly from Ofgem. And why have Ofgem not been producing this sort of data or making it public?

I am sure your data will be challenged and it will be interesting to see on what basis. So I suspect a “conversation” will ensue.

A couple of things surprise me. 1) The claim that most people are on variable standard tariffs. These are usually the most expensive, so we should be educating people to change, or banning these tariffs when we have much cheaper penalty-free fixed tariffs available. 2) ” the presence in the market of a range of smaller suppliers offering lower prices……” They come nowhere near the major ones in my experience.

I’ll watch this space with interest.

Profile photo of Patrick Steen
Member

FYI this was Ofgem’s response on the day we released our report:

“Ofgem welcomes Which?’s contribution to the debate on energy prices. We have consistently called for suppliers to explain the growing gap between wholesale prices and retail prices. Which?’s report echoes Ofgem’s concerns that bills go up faster in response rising wholesale prices than they fall when wholesale prices come down, which was one of the reasons for our referral of the market to the Competition and Markets Authority.”

Profile photo of malcolm r
Member

Thanks Patrick. I often wonder whether Ofgem has any real urgency in its approach to look after consumers’ interests. Why can it not, for example, investigate and act on energy companies that blatantly ignore the scale of wholesale energy reductions. Why does it have to refer such stuff to the CMA – which will take time to investigate, report and then longer to take action? Is all they can do to “call upon suppliers” – have they no power?

Their website says “In keeping with our remit, we look to ensure that the prices consumers pay represent value for money. We achieve this through the setting of revenue controls and incentives for the energy companies and through the supervision and development of the wholesale and retail markets.” How exactly are they supposed to do this in a timely way?

Profile photo of Beryl
Member

How can consumers know if they are receiving fair play when they are kept in the dark about wholesale prices? We are told 40% for this and 5% for that and we are expected to accept a percentage of something without having access to the full facts i.e. prices. Energy is bought at wholesale prices and then sold on to a company’s subsidiary before sold on to consumers who then have to resort to comparison sites, adding more again to the cost of their energy and now we have the added burden of smart meters to pay for, not to mention all the other add-ons. Whether smart meters can alleviate some of these contentious issues remains to be seen.

If more companies are offering fixed price deals without incurring penalties for switching, make sure you read the small print before switching because they can cancel at any time provided they give you 40 days notice. It is not in their interest to continue with a fixed price deal when prices are low as you can pull out at any time and switch to a competitor, so fixed does not necessarily mean fixed. It is better surely to do away with fixed deals altogether and revert back to standard variable rate but essentially, not until competition is restored to the market which is crucial if fair play and trust is to be restored.

Paying by DD direct from your bank account also needs reviewing as it allows the energy companies free automatic access to payments by default if you are not happy with the service, unless you cancel your payments with your bank which can be problematic during negotiations and the possible switching process. It is easy to continue your account online by submitting your meter readings and paying for what you have used simultaneously and still retain your discount. I believe this is already possible with some companies. People without internet access would be able to continue as usual.

According to an online report by USwitch.com, the energy regulator does not set energy prices and therefore cannot force suppliers to pass on any savings they make when the cost of wholesale gas decreases. It is up to the energy suppliers to assess the conditions of the market and pass on price changes accordingly. However, if Ofgem feel that an energy supplier is behaving improperly, it is free to launch an investigation into the company’s practices, which is a bit of a contradiction in terms.

I hope to be able to defer switching until we receive a full report on the state of energy market practices from the CMA when I will be in a better position to decide whether or not fair play has been established.

Profile photo of malcolm r
Member

Beryl, I’d just switch now to get your best possible deal. Why wait 18 months and, if it’s anything like most reports. another age before anyone decides to produce a watered down solution.

Profile photo of malcolm r
Member

Government interference in pricing can have a counterproductive effect. It has been suggested that the energy companies have not passed on as much of the price fall as they might have because of the possibility of a Labour government after the election who might then implement their promise to freeze energy prices. I wonder.

I’m not a fan of politically-motivated populist statements – a number going round at the moment from all parties – but they do have to be careful to think through their consequences.

Profile photo of cduffy
Member

Nowadays the consumer is expected to spend effort every year searching and switching suppliers for Energy , Broadband , Car Insurance , Home Insurance , ISA , etc…
Sometimes it just becomes too much to track every time.
If only suppliers would actually reward customers for real loyalty – i.e. a discount per year you stay with them then we would start to see companies who want to keep existing customers rather than just chase new ones.

Profile photo of malcolm r
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Colum, I think there were always better deals to go for before the internet, it was just a lot more difficult to trawl round and find them – it would involve letters, visits to brokers, banks, phone calls (if you had a phone) – only two energy companies and one phone company then of course. The internet has made that shopping around easy for the masses so if you take the trouble you can now choose the best deals available.

Profile photo of Beryl
Member

I have now started the process of switching energy supply on the net but having experienced bad service in the past and all the hassle that it entails, I feel the need to ‘phone around and speak to someone to establish the efficacy of service as well as prices, e.g. e how long does it take to connect to a real person and how well they can deal with my queries. I notice the two worst offenders for service e.g. NPower and Scottish Power are currently offering some of the lowest price deals.

Profile photo of malcolm r
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Profile photo of wavechange
Member

That makes fascinating reading, Malcolm. I would be interested to know what constitutes a complaint. I have rung e.on many times when I had a large credit balance or they had informed me of a forthcoming rise in my direct debit that was obviously unnecessary. I rather doubt that this was classed as a complaint.

Profile photo of Beryl
Member

Thanks Malcolm the data was very informative. The Which? February Magazine issue also contains some interesting data on customer service but it’s an added bonus to be able to compare actual figures.

Profile photo of malcolm r
Member

wavechange, from Ofgem:

“Energy suppliers are required to record any expression of dissatisfaction made to them by a consumer as a complaint.”

“Most complaints were about billing, prices and metering. There has been little change in the subject matter of complaints since 2012.”

Profile photo of wavechange
Member

Thanks Malcolm.

Scottish Power’s figures are set to rise when they receive a phone call about the 40% increase in my direct debit despite being £105.17 in credit. (I did overstate the increase in an earlier post.) I found out only when I logged into their website. I will wait for the next bill before contacting SP.

How difficult is it to send an automated email advising of a change in direct debit? Am I being unreasonable to expect to be informed about a 40% increase in a payment?

Profile photo of Beryl
Member

Wavechange and Malcolm: The FCA constitutes a complaint as follows:

“(a) alleges that the complainant has suffered (or may suffer) financial loss, material inconvenience, and

(b) relates to an activity of that respondent with whom that respondent has some connection in marketing or providing financial service or products, which come under the jurisdiction of the Financial Ombudsman Service.”

The full version is @fca.org.uk – Complaints Data.

May be of some help when you contact SP Wavechange!

Profile photo of wavechange
Member

Thanks Beryl. The FCA has a very different idea of what constitutes a complaint to Ofgem.

I’m waiting to see what happens when I receive my next bill. I’ve been using quite a lot more gas than usual because I’ve not been very well recently, so an increase in direct debit would be appropriate. Nevertheless, SP was not to know about this.

Profile photo of malcolm r
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Ofgem seem to have just about as all-encompassing definition of a complaint as you could wish. I wonder how many more complaints the FCA would have to record if they adopted the same approach?
wavechange, unless you have a smart meter I don’t know how SP would know – or do you use Facebook? Hope you are on the mend. 🙂

Profile photo of Beryl
Member

I am sorry to hear you have not been too well of late Wavechange, I hope you are feeling a little better now. I have just checked my latest SP account and I am £192,48 in credit after they halved my monthly DD. This should align with my usage last year and prevent my account being too much in credit as was the case at the start of the high usage period in October 2014.

My son bought me a Slanket for Christmas which has been an absolute Godsend during the very cold and not feeling so well days and has enabled me to save on my gas bill. (Tip of the week!)

Profile photo of wavechange
Member

Thanks both for your kind wishes. I’m on the mend. The main reason my gas consumption is greater than usual is because I have been stuck at home for most of the past six weeks, whereas normally I’m out for some time most days. I don’t use Facebook or have a smart meter. I expect that part of the increase in direct debit may be because of cold weather.

I know that e.on had a record of my ‘complaints’ because they occasionally mentioned that I had called about the same issue on previous occasions.

At the time of my troublesome switch from e.on to SP, I mentioned my problem with growing credit balances and SP told me that they did this deliberately to offset larger bills over the winter period.

I have enough in my current account to cope with unexpected rises in direct debits but what would happen in the case of someone who ended up with an overdraft as a result?

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Wavechange – glad to hear that you’re getting better. The team here wish you a swift recovery 🙂

Beryl – May I ask what a slanket is..? 😮 (blanket + ???)

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Thanks Andrew and everyone. It’s very nice to have all these kind comments. I just slipped on the ice walking off my Christmas pudding and have had to do a lot of resting. I’m nearly mended. 🙂

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Oh no! I hope you’re ok, Wavechange. However, I do have to remind you of our conversation about Christmas puddings. This is just another reason for why I’m not such a big fan of Christmas puddings – they just can’t be trusted 😉

https://conversation.which.co.uk/consumer-rights/christmas-pudding-leftovers-frances-quinn-great-british-bake-off/comment-page-1/#comment-1398225

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Winter tyres next time wavechange. Although you would think a substantial portion of Xmas pud would have lowered your centre of gravity sufficiently to prevent you tipping over? Glad your are on the road to recovery. -;D

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I’m certainly on the look out for good non-slip footwear that performs well in cold weather, Malcolm.

Alex – Maybe I should do a risk assessment on the consumption of Christmas pudding.

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Here you go wavechange, 13 pairs of walking shoes reviewed by Which?:

http://www.which.co.uk/home-and-garden/leisure/reviews/walking-shoes/

All have excellent grip.

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Thanks Andrew. I’ve bookmarked that. I had better wait until the left foot gets back to being the same size as the right one. 🙁

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worth looking at last year’s models of walking boots – one of my sons bought a decent pair of £130 boots for £65 from Millets.

wavechange – you could afford 2 pairs of different sizes on this basis to accomodate your current feet and as a hedge against the future. 😀

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My son always shops at Millets for his shoes but swears by Hi-tec brand but it maybe worthwhile looking at the other 4 Which? recommendations next time. Meantime, my slanket has a special pouch at its base in which to harbour feet Wavechange!!!

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Right – I will take as much care with the condition of my footwear as I do with car tyres in future. Better get back on topic. 🙂

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On that note, the CMA has giving its initial thoughts from its competition probe – we’ve done a brief summary of what they’ve found

https://conversation.which.co.uk/energy-home/big-six-competition-cma-energy-tariff-duel-fuel-standard/

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Andrew …………….yes it’s a fleece type blanket with sleeves so you can still operate your keyboard. They come in a variety of colours and are super warm.

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Very cosy! 😮

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Maybe the energy companies should be adding slankets to the energy saving light bulbs and other products they sell to help us cut our energy bills.

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They could give them out free instead of smart meters !!!

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Blanket with sleeves? Last winter they were called Snuggies. We used to call them dressing gowns. -:(

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Good idea Alfa, smart slankets sounds more appealing than smart meters!!!

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Once upon a time fixed price energy contracts imposed restrictions on both supplier and customer. The supplier agreed to supply energy at a fixed price for a stated time, typically 1 to 4 years. The customer agreed to stay with that contract for its duration, on their assumption that energy prices would rise faster than the contract or simply to give them a predictable energy bill; if they chose to leave the contract they usually could if they paid a penalty charge.

Now it seems totally one sided – the customer still gets a fixed price for a fixed period but, from most suppliers, can leave the contract at any time without penalty if they find a better deal – with their existing supplier or any other.

As these fixed price contracts are usually significantly cheaper than the Standard Variable Tariffs you might wonder why on earth anyone should be on an SVT (apparently an incredible 50-80% are, depending on the supplier). Partly ignorance, partly inertia, partly fear of change I suspect. So we need to educate people into seeing that selecting and changing tariffs can be straightforward and financially worthwhile. And helping them by making it even easier. Or perhaps abolish SVTs and, by default, put customers on a 1 year fixed?

One area, I would have thought, that Ofgem should be promoting with gusto (do any civil servants have this?).