Energy deals shouldn’t be this complicated

The energy companies have significant fixed costs and the issue is whether all users – big or small – should make a fair contribution to this infrastructure. I believe they should – others may disagree. The system at present allows the larger user to pay a substantial amount towards this fixed cost by way of a standing charge. A small user may choose not to pay this charge, but instead opt to pay a higher unit rate that helps recover some of this – but for a very low user the contribution is small. You could argue that the larger user is subsidising the smaller user by paying more towards the infrastructure.

It is misleading to say that the larger user benefits from paying less for energy – they are simply paying separately for infrastructure and energy. The smaller user has these costs combined into one charge.

Whilst many of us conserve as much energy as possible there are many who use significantly more energy than others for unavoidable reasons that do not need repeating. They should not be penalised.

Ay present the user has a choice – you can pick the tariff that gives you the lowest bill. Surely such a choice is reasonable.

There is no black and white answer here. Oversimplification can be counter-productive – choice is what consumers should be given.

Because in a given area it costs just as much for the infrastructure to provide a low and a high domestic user.
It is a fallacy to suggest that larger users have a lower incentive – energy is expensive for all of us and I for one do all that is reasonable to minimise my consumption and bills. The present system allows consumers to choose the tariff most appropriate to their needs. You can work out which supplier and which tariff givers you the lowest estimated annual charge and opt for that.

Why work out anything if we can simply compare the price per unit? Supermarkets provide unit pricing to help those who can’t do mental arithmetic to compare prices.

Though I am keen that we should all be able to handle calculations, not everyone can. Is there anything wrong with what Which? is trying to achieve?

Who funds transmission lines, generating capacity, pipelines, gas storage, investment in new power sources including green energy solutions, tidal, and so on. Some comes directly from the consumer. It is needed whether you buy a lot or a little.

It is not about who has complex plant – most industries and services do. It is about alternative ways of charging. Not whether one is right and one is wrong. If you pay phone line rental and call charges or have unlimited calls for a fee, if you buy a railcard then benefit from cheaper fares, if you have a prepaid prescription card so don’t pay for individual prescriptions – these offer alternative charging methods. That does not make them wrong – it gives the customer a choice of the best method for their circumstance.

Ofgem’s Retail Market Review document is available on their website. Primarily it deals with the simplification of tariffs so one would hope that if, and when, the proposals are implemented the current complexity will diminish.
I assume Which? has been involved in, or are aware of, this consultation. Do they disagree with it and are they making separate proposals to government? At some point a consensus has to be reached for progress to be made.
Ofgem seem to recognise that the fixed cost element of energy supply should be shown separately from the energy cost, and proposes tariffs that consist of a standing charge + energy unit cost. It is a PDF so if you search under Standing Charge you can find their proposals.

wavechange – the use of a two-tier unit tariff is just another way of recovering standing charges by the difference between the initial and ongoing unit costs. In this case they are for electricity £91.53 and for gas £91.39.
The overall costs are not bad – I use npower and the gas cost is around the same, while the electricity unit cost is around 10% more than npower.
Ofgem (document referenced earlier above) also favour a simplified system – an annual standing charge plus a single tariff. Simplification is on its way – but it won’t please everybody.

I appreciate the reason for the two tier pricing, Malcolm. You want to keep the standing charge and I want simple unit pricing. I read the Ofgem document when wind power was the topic of conversation. Let’s agree to disagree – and continue to agree on many other things.

The most important thing for me to remember is that unless I review prices in mid-2014 I will land up paying more than necessary for energy.

Thanks Johnecon. I have been aware of regional pricing since I first switched supplier, many years ago, and it is something that has been mentioned on Which? Conversation.

Having sorted out my energy supplier it is time to review my savings. It’s great that we have companies that offer ethical investments, excluding companies that sell tobacco products or exploit overseas workers, but its about time that we had the opportunity to open a savings account or ISA without having to remember that the generous rate of interest is likely to disappear in a year or so. No doubt someone will remind us that the information is in the T&Cs but perhaps it is time for companies to think a little more about customers and less about their shareholders.

This is another reason to get rid of standing charges, and also dual pricing systems that charge more for a certain number of units.

We don’t pay a standing charge when buying fuel for our cars. All the costs of distributing and selling petrol and diesel are included in the cost per litre.

Paul S, suggest you change your supplier to one that offers a single unit price with no standing charge. They are available now – Ebico for example – and is among the options being put forward by Ofgem. What may be fair to you may not be fair to someone else of course!

Ellen

As you say, the cost of us switching suppliers costs money and we – the customers – will pay the cost. It would be good if Which? could give an estimate of the average cost of a customer switching.

Magnets will not affect the hardness of water. Anyone still selling them for that purpose should be reported to Trading Standards.

If I recall correctly, Which? said that the EnergyEgg was one of the eco-gadgets best avoided. We had someone using Which? Conversation to promote them last year.

Ellen, you need to consider the cost of the equipment to trade off against the savings – unless you intend to save energy for its own sake. The Energy Egg was examined earlier, and was not cost effective I believe.
Soft water will prevent scale build up and marginally save energy in time, but 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!

wavechange/Malcolm R
Yes it would help to know costs of changing suppliers.
Energy suppliers, lets face it, do not want to sell less energy. To me it seems like they are doing things, to make you believe that they are doing something to reduce costs. All that is happening is that they are moving goal posts. Cost will always go up and just changing Energy Companies does nothing except make them more competitive, and we are then bombarded doorstep sales etc. this must be a high cost practice. give me a solid supplier anytime.
The use of a magnet on the water inlet pipe keeps my kettle relatively free of chalk. and only a swish round with a brush every few months. Comparing my kettle others who do not have this fitted is quite something to see. have you tried it out? I am not after soft water, just something that keeps the pipes and boiler relatively free of chalk. we also use Calgon in every wash in our washing machine. I saw my old tank when it was removed in the 70’s half full of the stuff, and understood then why took hours to heat with the immersion. You can only use the information you learn, hear/read about to make decisions
The Energy Egg I think is one you have to try, it seems to me it has its place. One dizzy friend of mine, went out leaving the hair straighteners on (on the bedroom floor) and in the middle of the night stepped on them and had burnt feet. In a teenage household it would give peace of mind to parents from a safety angle and under these circumstances would save cash, let alone saving your home from potential fire.
The purpose I would use it for is to use plugs that are placed in ridiculous places . Our practice has always been switching off the power at the plug, but now its difficult to reach some of these plugs rendering them obsolete. I do like gadgets, and this one I think will be very good for the young, the aged, and the forgetful, and if it saves a few pennies it will also pay for itself eventually.

Ellen – There have been numerous trials of these magnets and they have no effect on water hardness. I’m a scientist and have a particular interest in companies that sell products that do not work. The change you have seen may be due to changes in hardness of your water supply. Mine is softer than it used to be, though still described as very hard.

I suggest you have a look at the Conversation about Calgon: https://conversation.which.co.uk/energy-home/calgon-washing-machines-limescale-live-longer/
I think you would be better to use a water softener.

As far as the EnergyEgg goes, I was simply passing on advice from Which?
http://www.which.co.uk/energy/energy-saving-products/guides/10-eco-products-you-dont-need/

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.

johnecon, I like the perspective you take on the cost of space. There is always a price to pay and that you can choose your options. Having to deal with sometimes desperate Sales people is not my favourite occupation.
We have the luxury of a south facing lounge, and pull the curtains when it gets too hot, but in the winter the temperature doesnt change in our home much at all, it is 26/27 degrees in our living space and between 17/19 in the rest.
With a really intelligent heating control you can decide your own comfort level and it stays that way, you don’t notice any changes in temperature. I know when we visit some homes to take an extra jumper. The best thing is that we pay less in bills than our friends who have their homes at a much colder temperature.
Getting more for your money is an obsession which I am happy to follow. even if you pay to do so initially, in everything we have done the cost has always been recouped eventually.

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.

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.