What does loyalty mean to you and your energy company?

There is an astonishing and shocking statistic at the start of this Conversation : “14m of you are on a standard tariff with one of the biggest 10 energy companies and over 8.5m have been on that same tariff for more than three years.” That’s not fourteen million people out of a population of over 65 million, but fourteen million households out of a total number of households of 27.1 million in 2016. Let’s ignore second homes and properties where someone else determines the energy supply.

That number must include some intelligent, knowledgeable and well-informed people, so this message isn’t getting through even at that level, let alone to people who, for whatever reason, just cannot engage with the idea of switching or are concerned it will go wrong [and that is another problem that energy companies have created].

Surely it is time for compulsory action to ensure that, as a minimum, the standard tariff and the cheapest deal are priced the same by every energy company [the first of the suggested tactics outlined in the article]. Apart from anything else it will make comparisons much easier by reducing the options.

I would also support the elimination of the fixed-price fixed-term tariffs that are effectively subsidised by those on the standard tariffs. Malcolm has frequently pressed for this but there has never been any acnowledgment from Which? that it might help or an explanation of why it might not be the best policy. I am tempted to conclude that Which? has a conflict of interest by running a comparison website that attracts commission [from the energy suppliers] arising from its use since there would be a large drop in use of the site. Which? Switch is a good site, better than the others in my opinion, and it works well, but it should not cloud Which?’s judgment on tariff policy.

Among the 14 million households there must be many Which? subscribers and readers of Which? Conversation, so the question has to be asked: is lecturing and hectoring consumers the best way to resolve this problem or is something more direct, forceful and beneficial, aimed at the source of the problem and not the poor confused consumers, now required?

The other major unfairness is entirely within the government’s purview, and that is the various policy oncosts that are applied to bills to pay for various renewable energy subsidies and the smart meter programme – which is increasingly regarded as an exorbitantly expensive but limited-value exercise during this time of austerity. These overburdens on our bills, which attract VAT on top, are regressive because they bear disproportionately heavily on people on low incomes and on those who have to maintain high or continuous levels of heating [applying to both categories in many cases]. These costs should be transferred to general taxation so that they are charged in a more equitable manner. The government [every government] always ducks this issue when grandstanding on the need to curb energy bills.

I doubt “loyalty” is what this is about – it is lethargy. Most people have busy lives and this is just another task that many avoid. Why? A lengthy report found that for many people the savings they would make were insufficient to prompt them into action. As John rightly says, many on standard tariffs are clued up as to what they do, but not bothered enough to change.

I have many times asked Which? to look at why fixed price tariffs are so much cheaper than standard variable tariffs; the difference cannot be accounted for by the apparent claimed “administrative” savings. So the thought remains that they are subsidised – by those on svts – as a way to attract new customers for a year who then keep switching. So what is the use of them? I would scrap them, make svts the norm, and reduce their cost accordingly.

Reward programmes? I don’t want these; I want straightforward prices.

Tracking wholesale prices? I thought in general tariffs did. But bear in mind what we mean by “wholesale prices”. The larger suppliers buy energy maybe 3 years ahead to help provide stability to their costs. Smaller companies may not have the means to do this, and rely on short term pricing which can be volatile. If their tariffs are such that they become unprofitable when costs rise in an unexpected way – a world “situation” or bad weather in the USA for example – they might not have the resources to be able to cope with it and succumb, as happened a couple of years ago.

We should boil energy down to its basics – wholesale costs, transmission costs, administration and profit (plus vat regrettably – although when we leave the EU this could be removed – but most unlikely). That is what the energy companies should be asked to charge us for, then we can see what we are paying for. All the government “extras” should be paid for out of taxation – John and I agree I think – and these are set to add another £100 to a typical bill, so are a significant part of our expenses.

Which? ask some questions, but I’d find it more helpful if they would look at comments made extensively in their Convos, and piece together a real proposal for future energy pricing.

We focus on energy as it seems to have been made an emotive topic. However, with an average food bill likely to be around 2.5 times as much, and rent between 5 and 18 times an average energy bill, perhaps those deserve equal or greater attention. It is far harder to change landlords than your energy supplier.