/ Home & Energy

Energy deals shouldn’t be this complicated

Call centre staff

We’ve launched our third investigation into how energy deals are sold over the phone – energy companies are getting better at offering us the cheapest tariff, but are still struggling to give us accurate quotes.

We rang up the six major energy companies twelve times over the course of a week in November 2012 and asked for a quote for their cheapest deal. Putting aside some of the strange prices we were quoted, what struck me most is that it still feels far too complicated to work out the best deal.

Even after analysing fifty or so of these calls, I was still discovering new jargon and an array of discounts that I didn’t fully understand, from paperless billing discounts to Nectar points as a ‘thank you’. I was also left bamboozled by the subtle differences between unit rates and standing charges that many salespeople listed at the end of the call.

Struggling with the sums

Two of the most striking calls were when salespeople tried to figure out a quote for us using pen, paper and a calculator after their computer system went down:

‘So 15105 x 0.0374 is 565 just about. Right 365 days at 29.616, this can’t be right, that’s £2,000, that doesn’t make sense, try that again. 565,365 times 0.29616, put a point in, it might make a difference. Right £108 that makes more sense. Right so gas would equate to 673, that’s without VAT. VAT at 5% would make that 6, £700 more or less.’

When you see the professionals scratching their heads and performing some seriously complicated maths, it does make you wonder – does it really need to be so confusing?

The answer is… simplicity

In November 2012 we did an investigation that showed that only 8% of people could work out the cheapest tariff when presented with six different energy deals. It’s hardly surprising that most people don’t even bother trying to find out the best deal for them, even though some could save hundreds of pounds a year.

That’s why we are calling on the government to ensure that prices can be easily compared at a glance, like on petrol forecourt displays. A single unit price would allow people to find the cheapest energy deals with ease.

At the moment, the maths just doesn’t add up. It’s time to simplify the process and cut down the jargon, so that we can all have clear, easy-to-compare gas and electricity prices.

Comments

Ellen, wavechange, of course customers’ switching involves a cost and customers end up paying it. The best way for this cost to be avoided is for all suppliers to be so competitive that no one finds it worthwhile to switch for such a small saving.

As long as this is achieved legally and not by price fixing, johnecon.

Suppliers will have different costs – admin and energy purchase – just like any other business. Competition is about making one supplier more attractive than another for some (but not all)consumers. So shopping around is one way of maintaining competition – just like food, insurance, or whatever.

Yes, wavechange, it has to be achieved by competition and not by price fixing, and prices have to be more attractive for *most* consumers in a particular region to be truly competitive, Malcolm R. Ironically, if a high degree of competition led to universally competitive prices and no one switching any more, suppliers might think that no one was concerned about prices, which could be a market, but not legal, green light for price fixing. I am convinced that this low risk, typical utility industry should have its profits regulated to a maximum rate of return on assets employed. Apart from the unlikely strategy of accepting a lower rate of return, competition would then be a matter of reducing administration costs and making purchasing and the physical infrastructure as efficient as possible so that prices could be low.

Malcom R I woke up this morning, thinking did he really say that “unless you intend to save energy for its own sake”
What is the Green Deal all about! we have to use less energy. Are you willing to take the chance on the consequences.

“The Energy Egg was examined earlier, and was not cost effective I believe”
Perhaps it doesnt save much energy, but it delivers in otherways, ease of use and a safety angle. I ask no more from it. GB is renowned for not acknowledging new ideas I say give it a chance to prove itself. After all there are loads of really worthless goods on offer in our shops.

” I don’t believe the electrical methods are particularly good or effective. Best to fit a resin/salt one. It won’t pay for itself in cash terms, but it’s much nicer to bathe in slippery water!”
Sorry I don’t want “nice” just results, as our washing machine has lasted 10 or more years without servicing in a considerably hard water area, I am satisfied with that. We looked at the water softeners many years ago , but never felt the cost justified the purchase. the £25 cost involved and the fitting this magnet into a pipe seems to work. We also had one of the Scale-watchers purchased when they first came out in the late 70’s ( the electrical ones) and yes it does reduce the chalk build up. That was after our pump ceased up, and saw the content of our old tank.

We will keep buying things to reduce our costs We are already 30% lower on central heating, and more than that on electricity. We brought a cup cake maker for our grandchildren, which take two minutes to bake. They have the fun and the results and I save more by not using the big oven. So that pays for itself as well. Why keep handing cash over to pay for increasing bills and not look at how to reduce them.
The energy Companies I believe should look at new ways to provide power.
What about the Wave Power in Hayle Cornwall or Solar in Africa, they would become the richest Nation if all that sunshine was harnessed, and exported.

Ellen, don’t lose sleep over it! Yes, I did say that as a personal view. If we wanted to save energy for its own sake, we would not take foreign holidays (fly and cruise energy consumption), we’d drive as little as possible in the most economical cars around (or use public transport), we’d have much smaller houses to minimise energy costs etc. These are lifestyle choices that we can all make if we wish.
It was estimated as cheaper to buy a new washing machine when it finally failed than to use softener tablets in every wash. A resin/salt softener might well be cheaper in the long term thant treating an individual appliance – depends how long you stay in your house.
You do pick up a point I have made elsewhere – we are surrounded by a huge and reliable source of energy – tidal – and yet I see little enthusiasm for developing it. Instead we waste money on wind farms and feed in tariffs for solar panels (and HS2).

Malcolm R, Yes I agree with the use of tidal power. Not much information is being generated about this particular energy source. The last time I heard was that the project was producing power for 8000 homes. If this is true then who would take this forward? Not the Energy Companies thats for sure.
The wind farms in Cornwall look majestic, but I would not like to live down wind from them, also they are high maintenance apparently. Solar I feel has little maintenance, and even with the original feed in tariff it will take 12 years to pay for our installation. Our most cost effective purchase is the Klimat K2007.

With regard to the washing machine, over the 10 years of use you are right, after a quick calculation,we have probably spent over £500. on Calgon. the washing machine a Hotpoint top of the range. but are willing to make this decision to use it as I don’t think the cost of putting the machine into landfill was taken into account.

Ellen, I imagine tidal power installations might need to be government funded (EU?). Like nuclear power the high cost might be difficult unless a consortium got together to rip off the taxpayer. Better to invest our money in tidal than HS2 – still creating jobs bit with a useful outcome.

Malcolm R, We do not hear much about Digesters,
There is one on a Farm near us, and its placed less than a mile away from our home, its been the a few years now and there is no smell at all. it is for vegetation only and powers the Farm. It saved the constant flow of tractors to the landfill as well, which used to put time onto every journey.
Sorry its a far cry for Energy Deals but once on my band wagon! If the Energy Suppliers took that kind of initiative I am sure I would join them in a flash.

Wavechange, thank you for pointing out the Calgon findings, now I feel uneasy, the only thing I have based it on is the fact my old washing machines lasted 3 to 5 years, and now I have one that has lasted over 10 years. yes it could be lower temperatures or cold fill or a better machine, am I prepared to change a ritual, I am not sure. Also actually seeing chalk disappear from the outside of the pipe. Yes I would love a water softener perhaps it is not such a luxury item.

The findings on the Energy Egg I find harsh, I do think there is a real place for this gadget in family homes, for elderly and infirm, for safety and ease of use. if there is a small saving then so much the better then it will pay for itself. The £40 would be a worthwhile spend.

I looked carefully at all of the other suggestions and was disappointed to read that Intelligent Heating Controls and weather compensators, “go beyond the best practice” it seems to me as though Which has shelved these valuable resources and not considered at all. when in my experience the Klimat K2007 saves 30% and payback is considerably a lot less than the 12 years it will take to pay back for my solar panels, and that is with the high early FIT . It offers weather compensation and intelligence to give a living temperature that is set at your comfort levels. Why on earth would you turn down a thermostat and feel uncomfortable, when you can enjoy warmth and know that you are using less energy, and was easily retrofitted.
We take daily readings and have adjusted our cooking to reduce costs, why on earth would we want a smart meter, its easy to know what your daily usage is, and what sends the dial up faster than anything is the Oven.