/ Home & Energy

Is your energy supplier failing to explain a ‘simple’ tariff?

Word 'energy' in bulb for energy suppliers

Have you switched energy providers recently? If so, did you use the Tariff Comparison Rate (TCR) to help inform your decision? Do you know what it is and how it’s designed to help you?

The TCR is the regulator’s new price comparison tool designed to make it easier to compare energy prices. It tells people how much a tariff costs per kilowatt hour (kWh) based on medium usage and is intended as a guide to help compare tariffs.

However, tariffs with a low TCR might not be the cheapest deal for people with low or high energy consumption. Only 25% of households are medium users for both gas and electricity, which is why it’s really important suppliers can easily and accurately explain how it works to customers.

As part of our Fair Energy Prices campaign, we carried out some mystery shopping to find out how energy suppliers explain the TCR and found that they are failing to provide customers with the information they need to accurately compare tariffs.

What happened when we called energy providers

We called 13 energy suppliers, six times each, equating to 78 calls in total (lucky us!), asking them to explain the Tariff Comparison Rate. We were given accurate information in only four calls – which works out to just 5% of calls. Eon and Npower were the best suppliers, giving an accurate description of the TCR in two of the six calls they both received.

Our previous research showed only 28% of people got the right answer when asked to identify the cheapest deal from a range of tariffs using the TCR. We also found that when the tariffs were presented in our simple pricing format, the number of people selecting the cheapest tariff shot up to 84%.

Our Fair Energy Prices campaign, is calling for energy suppliers to adopt simple pricing, presented in the style of a petrol forecourt display, so people can more easily compare deals and find the best deal.

We believe that if energy companies can’t even explain how to accurately compare tariffs then their customers stand no chance. We want suppliers to up their game and ensure they can provide consumers with a clear and accurate explanation to help them find the best deal.

Have you ever used the Tariff Comparison Rate to see if you’re getting the best deal? Has an energy provider used the tool to help you or is this the first you’ve heard of the initiative?

Comments
Member

In her introduction, Kate wrote: “Our Fair Energy Prices campaign, is calling for energy suppliers to adopt simple pricing, presented in the style of a petrol forecourt display, so people can more easily compare deals and find the best deal.”

I strongly support this approach. Let us help people to understand energy prices.

Member

Have to be honest, I have no idea at all what “Tariff Comparison Rate” is, I have never even heard of it till now.

The last time I changes was 2 years ago from NPower to Scottish Power, to Ebico/SSE whom I am still with now!

I picked SSE/Ebico as they have 1 rate, no different levels on how much you use, no standing charges, no extra for not paying via direct debit. Just one price & that’s in.

Member
PeterM says:
19 November 2014

What annoys me most, and is really now a long time out of date (around 23 years I think), is the regional variation on pricing.

Historically I suspect it was that the incumbent energy firm (MANWEB, NORWEB, etc) was undercut by the competitors (so SWALEC would undercut in other regions, and all the others were the same).

So there became a set of pricing in each region which has remained to this day (and the reason why the first thing a comparison site needs is your postcode, to identify which set of prices to show.

If the simpler pricing model came in, as desired by this campaign, I hope it would be possible for the same pricing to be identical across the country, the way that phone calls are, based on the company, not the company AND your location. We have a common price for so many things, eg stamps, whether in Aberdeen or Plymouth, and the energy firms use the “transport cost” as part of their reason for different charges, but as the gas or electricity you get is from a common set of pipes / cables in the street, whichever firm you use, it’s just a bit of smoke and mirrors.

How can it be fair that some areas have charges as much as 18-20% higher than other areas from a single energy company? I think we need a “level playing field” so those in the very remote parts of the UK aren’t priced 20% above other parts (and my original checks about 6 years ago showed the MANWEB (Merseyside/ N Wales) area was charged 18% more than Humberside by British Gas, so not just remote rural areas but major unexplained differences in cost (which I believe started from the first year or two of “competition”).

Member

I guess because gas is brought ashore on the East Coast the transportation cost is negligible for the gas compared to Liverpool.

Rather like petrol prices near refineries is generally very much cheaper than in places which require road tankers to make lengthy delivery journeys

Member
PeterM says:
19 November 2014

I think the concept of a TCR may “have a place” but I’d like to see OFGEM order all the energy firms to publicise all their “per unit” charges, daily charges, and (for completeness) annual charges.

Those who want to quickly estimate the bill can multiply the unit price by their usage and add the annual charge for a fuel… it would also mean someone who is a low user could choose a firm with no annual charge, so if they hardly ever use gas, they won’t have a 70 to 120 pounds a year charge just for the pipe being in place. Thanks for the info, Lee – my sister has a cottage on Anglesey and gets stung for the “daily charge” when it gets used mostly during the summer months, and certainly less than 6 months of the year.

I switched from E.On (installed before I moved in) to Co-Op and then later to EDF. I used the MoneySavingExpert energy club (which will alert me if some other firm offers a significant saving {user can set the threshold from 0 to hundreds of pounds before getting the e-mail alert).

Member

So if we change the system so there is no daily charge I will be able to subsidise somebodies summer cottage in Anglesey by paying slightly more per unit of gas.

Guess what. I don’t think that is fair.

If we are going to have a system then base it on the cost of the infrastructure needed for supplying the property and then add actual consumption.

Member
PeterM says:
3 December 2014

I don’t propose scrapping the annual charge, but, as I think you suggested elsewhere, allow companies to offer different models, so if they want to offer a lower annual/daily charge and a higher per unit fee, that’s for them to offer (and the customer to decide if it is the best model for them).

Member

” Thanks for the info, Lee – my sister has a cottage on Anglesey and gets stung for the “daily charge” when it gets used mostly during the summer months, and certainly less than 6 months of the year.”

PeterM,

Really get your sister to look into Ebico, they use SSE for all the billing, customer support, everything. Like i said they have no daily charges you pay JUST for the units (Plus VAT). So for low users or people who are away half of the year it is perfect!

Member

The Tariff Comparison Rate is a blunt figure – helpful to very few. The way to get the best deal means looking up the unit rate, the daily charge (if there is one) and, importantly, your annualk consumption. Then calculate your spend. If, as many believe, we Brits are incapable of multiplying two numbers together and addind a third, (your mobile phone has a calculator) then sinmply put your annual consumption into Which? Switch and all the work is done for you.

Petrol pump pricing – i.e. only paying a unit charge – is unfair and, hopefully, dead in the water. There