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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
Profile photo of wavechange
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.

Profile photo of Lee Beaumont
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”).

Profile photo of Patrick Taylor
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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).

Profile photo of Patrick Taylor
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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).

Profile photo of Lee Beaumont
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” 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!

Profile photo of malcolm r
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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 is a fixed cost to an energy supplier in providing you with a service – currently meter reading, administering your account, and some goverment levies that are not, or should not be, consumption dependent. Why should high users pay more than this fixed element costs, and why should low users not pay their share? High energy users are not automatically rich, and low users not poor.

Profile photo of John Ward
Member

“Petrol pump pricing” works for road fuel because we go and collect it. Gas, electricity, and oil are brought to the property and the distance makes a difference to the cost.

There is a case for standardising a maximum “service charge” across the country to incentivise the energy suppliers to do it more economically and not play swings and roundabouts with different elements of their costs.

There is also a case for having a standard connexion charge for each type of meter to cover installation, repair & maintenance, safety, compliance and interrogation.

The strongest case of all is to put these government levies where they rightly belong and not add them to people’s bills pro rata to consumption.

The fact that we have to keep having these Conversations – where we learn a little more each time and further wrinkles emerge – is evidence enough that the energy supply system in the UK, for an essential and identical end product, is a total mess; governments won’t deal with, they just kick it around until something else crops up.

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The Garden of England says:
19 November 2014

I feel that the whole privatisation of the energy companies has at best brought little benefit to the customer for which at the end of the day is being bombarded by tariffs, offers and pressure from well meaning advice from consumer organisations and price comparison sites suggesting to switch for a better deal. But does the consumer really understand if the offers being advertised are the best for their needs. I guess not. I would like the “open market experiment” to come to an end and lets keep life simple and lets get back to basics. After all we all have busy lives to lead and spending hours online every year comparing energy prices to see if A is cheaper this time than B was last time is at best, a shareholders dream, and a consumers nightmare.

Profile photo of malcolm r
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TGOE, it really does not take long through Switch with Which? to check what other deals might benefit you. Many people spend time looking for better prices for consumer goods, books, and all manner of things on the internet – but of course you are not obliged to.

Profile photo of Patrick Taylor
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I agree with Garden in simplifying life. If companies had only one day per year that they could offer their tariffs then at a stroke we would simplify life for everyone , save acres of webspace, and tonnes of paper.

In Germany all sales used to have to occur in August – with similar beneficial effects on people worrying over getting the best price and also finacial benefits for the consumer.

Profile photo of wavechange
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Many have elected for tariffs that are fixed for a year and it might be easier if energy prices were offered annually for all companies, on the same date.

I was in favour of privatisation of energy supply because I believed that competition would be better for the company. Unfortunately we now have a whole bunch of problems. UK energy supply should not have been allowed to fall into the hands of other countries. We have complex tariffs making it difficult to make price comparison and the fact that a very large number of people are paying more than they need to for energy indicates that the system is working. The companies are pushing the roll out of smart meters, pointing out advantages without mentioning the huge cost of installing them. We have had huge investment in wind power funded by us all. It’s commonsense that we need to spread investment into other forms of renewable energy because wind is unreliable.

What do we do to prevent companies making excessive profits at our expense?

Profile photo of Lee Beaumont
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Standing Charges,

If energy companies had a fair price per unit & also a fair standing charge (say £10-£12 a year) then yes, I would be happy with that. But the thing is, energy companies do not charge a fair price. They try and rip-us off at every possible opportunity.

If SSE/Ebico can do it why can’t the rest? Just thank god the UK brought in the 08 ban this year as at least now they can’t make even more money from the 08 phone numbers!

Oh it’s far too early in the day for a rant, need a good cup of tea lol

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PeterM says:
20 November 2014

I don’t think a single day for pricing would be realistic. I think it would stifle competition, because as things stand, if a firm is losing customers (because many feel their rates are too high), the current system allows adjustments to be made.

Also, the energy firms buy months in advance, and need to be able to estimate their customer numbers to determine their requirements. I’m not saying a firm would have their supply “run out” but the penalty of buying at short notice could lead them to go bust (they would be locked in terms of what their customers would pay, but could be charged double by some other supplier who has some “spare”, and as they would need to increase prices to cover what they had paid out, they’d be less competitive and lose more customers…)

Member
PeterM says:
20 November 2014

re smart meters – there will be some UK standard (not yet agreed) so any smart meters installed now seem likely to need replacing. It might be helpful now, I don’t know (don’t have one) but it would surely make more sense to collectively agree on whatever new design will become the ‘standard’ and not install any other smart meters until the ‘standard’ has been decided.

Profile photo of Patrick Taylor
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Peter M

A single day pricing and a slight fudge factor as allowed by law say 3% unless a force majeure is declared. Gas & electric companies are able to fuzz the market by a continual stream of tweaks – fortunately now restricted to 4 tariffs.

It is a swings and roundabouts thing as the company that lost out will be keener the following fix date.

Profile photo of malcolm r
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Single day pricing seems not necessary these days as most “fixed” deals have no exit penalties. So you can fix your price with your supplier for a year but, if a better deal comes along, leave it and take advantage of the new one. I have changed my deal twice so far with my existing energy company – prices have come down a little, so I changed from one fixed price tariff to their better one. 5 minutes on the computer, change took effect in 48 hours.

Profile photo of malcolm r
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Lee, totally agree. The standing charge should reflect the actual fixed costs each supplier incurs in providing you with an energy supply. Ofgem should ensure these costs are investigated and fair.

These fixed costs are not some illusory device. It does cost something to read a meter and to administer an individual’s account. The government has decreed that smart meters will be paid for through your bill annually. The government does require energy companies to pass on certain regulatory (“tax”) charges – supporting low carbon technologies, maintaining security of supply, improving customer energy efficiency, supporting vulnerable customers, for example. These costs should be the same for all consumers with a given supplier and should not be cross-subsidised; we should pay our fair share. Arguing that a high user in a big house can afford to contribute much more than a low user is a fallacious argument – it assumes one is wealthy, the other not. I see no evidence supporting that correlation.

The alternative of higher unit charges with no standing charge should also be on offer for us all to make a choice. The energy company takes the risk here – and their higher users will contribute more than their low users. As long as customers know they are then subsidising then I see no problem – it is about consumer choice.

Profile photo of wavechange
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I am strongly opposed to standing charges, which mean that those who use little energy subsidise those who use a lot. We need to think about those who cannot afford to heat their homes properly. Should they be expected to subsidise those who can afford large homes or are wasteful.

There are people who need extra heating for medical or other reasons. We should help these people, but not every high user. Lets make it fair and easy to understand, with simple unit pricing as mentioned in the introduction to the Conversation.

Profile photo of Patrick Taylor
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I have a problem understanding your logic wc. You seem to be suggesting that the standing charge that relates to the infrastructure costs subsidises usage?!

If you do not want to pay for the facility of being connected to the main utilities then you are at perfect liberty to buy LPG and run your own generator and go off “grid”.

However in the spirit of absolute fairness whatever the consequence I suppose we should all pay towards the bills of those who are unable to connect to mains gas so they pay precisely the same charges as anyone else in the UK when it comes to heating etc.

If we wish to assist the low users who are poor then society can; but subsidising those who have two, or more homes is unpalatable. I can understand those who rent out holiday homes in remote spots will be eager for this sort of solution.

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PeterM says:
20 November 2014

Part of the problem is the inflexibility that utilities impose on us. In France, a phone line renter with Orange can opt to have the line enabled or disabled on a month by month basis, so you don’t pay for months when you won’t use the line. Simple. If they can do it in France, why not the UK ?

If you can do that with the phone line, it would be nice to have the same option for gas and electricity. A property not being used all the year (because some of the pensioners go to Spain, for example), could surely have electricity and gas disabled. It would make them safer in some ways, and under those circumstances, would it be fair to charge a daily fee for ‘availability’ ?

Energy firms for years did not have a standing charge, and absorbed it into the unit pricing. I assume that’s exactly what SSE/ Ebico is doing. Would you ‘ban’ such a firm, simply because it uses a different model for covering its costs? The ‘availability’ is still there, but they charge on usage, not a (significant) annual charge and a tiny usage fee. That type of charging is hitting many pensioners who might use mostly electricity and very little gas, but find their annual gas costs have trebled because of the imposition of this standing charge.

Profile photo of Lee Beaumont
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“Energy firms for years did not have a standing charge, and absorbed it into the unit pricing. I assume that’s exactly what SSE/ Ebico is doing.”

That is true, I pay 1 penny more per unit, but as I’m such a low user it’s cheaper than paying a 28p per day standing charge that NPower wanted.

Profile photo of Patrick Taylor
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Interesting to hear what Orange can do however the infrastructure cost of a pair of twisted wires is substantially less than gas and electricity mains.

However let us work with the concept that all those houses who just use gas for heating decide not to pay for those glorious 6 months of an English spring to autumn. Does this mean the infrastructure cost disappears or that those people who need gas for cooking or because of health issues need it for heating should pay more?

The case of Giffgaff and pressumably ebico is that they buy wholesale stay lean and have very small overheads and probably no infrastructure costs.

Profile photo of malcolm r
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Lee, for a very low user you are – of course – getting the best deal. Ebico, for my area, charges 60% more per unit for gas and electricity compared to my supplier – but I pay a standing charge. Ebico would make sense for people who use less than 2000 units of electricity a year (an Ofgem “low user”), and less than 5800 units of gas a year (only 65% of what an Ofgem “low user” would use.

It is good there is this choice – consumers need to be able to find the best deal for their particular circumstances. But you need to be careful – a hard winter can push up consumption significantly and then someone will be paying a very high unit rate and lose any potential saving.

Profile photo of wavechange
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Dieseltaylor – You suggest that we should pay a standing charge to cover the costs of the infrastructure. We don’t pay a standing charge for petrol and diesel because the costs are covered in the unit price, as with most things we buy. Standing charges bear little or no relation to whether a property is in a built-up or rural area. Perhaps the government should fund infrastructure costs from taxes, since we all need energy.

You mention the possibility of going ‘off-grid’. I have spent many holidays doing this and it’s not cheap, even in the summer months when there is little need for heating. But is a very good way of becoming aware of energy use.

I very much agree that we should not be subsidising the cost of energy supply for second homes. Perhaps that could be tackled by increasing council tax for those who own them. As I have said, we need to address the problem that standing charges mean that low users are subsidising all high users, including many wealthy people. That’s as daft as giving fit people disability benefits.

So what about funding standing charges through taxation and having simple unit charges that can easily be compared?

Profile photo of malcolm r
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wavechange, there is no logic in asssuming petrol pump pricing must be “right”, and energy standing charges are “wrong”. No single supplier brings petrol to your door and normally lets you pay monthly. They are different businesses. However, it might well be in your local petrol station’s interests to enrol local residents for an annual fee and give them discounted fuel – to attract more regular business. Or would that be anti-competitive? Just another business model to give consumers a choice.

Energy companies basic fixed costs are commercial costs – absolutely nothing to do with government, and certainly not your local council. We should pay what it costs to whoever carries the cost – straigtforward and fair. I would, however, propose that the regulatory charges imposed by the goverment might well be better funded from tax, and removed from the energy companies.

High energy user wealthy, low energy user poor? Can you provide evidence for that universal assertion?

Profile photo of John Ward
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The whole issue of second homes was bound to enter this Conversation because it represents yet another crazy anomaly. There are second homes used for earning a letting income and others just used as a holiday home. In my mind there is no question that owners in both cases should pay the full and fair cost of their energy use and not be subsidised by anyone else. But tinkering with the Council tax to iron out the anomaly would probably not be fair; Councils already have a discretionary power to allow discounts for second homes in recognition of the fact that their owners should not have to pay twice for education and social services, but the use of this discretion, and the percentage discounts applied, are totally inconsistent and their availability or otherwise in different areas are more closely associated with political attitudes than any rational judgment. I wouldn’t want to see energy supply thrown into this mix and stirred up by local politicians.

Profile photo of wavechange
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Malcolm – It was not me who suggested simple unit pricing for energy, though I suspect that there would be a lot of public support from the public.

“High energy user wealthy, low energy user poor? Can you provide evidence for that universal assertion?” I have not made that assertion, have I? What I have suggested is that our benefit system could be used to support people who have a medical condition or other genuine reason for having to use more energy.

Information about the number of people who are in arrears with payment of energy bills or have been disconnected is publicly available, I believe. Obviously some of this is due to poor financial management, but there are some people who are really struggling for other reasons.

Profile photo of John Ward
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If we applied just a fraction of the combined intelligence and computing power currently being exercised by the energy and other utility suppliers in fragmentising and rebundling their tariffs to the problems of customising assistance to those who need and deserve it in the face of this budgetary maelstrom it would be a great service to our entire society. As well as medical conditions, I should like to see included in your “other genuine reason” box the case of people who have virtually no choice but to live in homes that are impossible to heat economically and can hardly be improved. We could start by targetting the Winter Fuel Payment now coming out to where it’s really needed. Perhaps if we can get the immigration issue out of the headlines we can get the politicians back on topic.

Profile photo of wavechange
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Well said John. Let us give support to the people who need it.

Profile photo of malcolm r
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wavechange, this is not a personal argument! I refer to your pseudonym simply to ensure my reply is linked with the right comment.

However you have said “As I have said, we need to address the problem that standing charges mean that low users are subsidising all high users, including many wealthy people”. I do not see there is a universal distinction between wealth, and energy use. What single unit pricing would do is simply mean higher energy users would subsidise lower uses – why is one right and the other wrong? I’d rather see all energy users pay the going rate for the energy used, and the going rate for the actual cost of providing them with a service. Fair then to all – wealthy, just-getting-by, or poor!

This does mean ensuring that the fixed cost is fairly assessed – and preferably with the goverment’s imposed costs removed into general taxation. My (ex) supplier’s costs were about 13% of an average bill including customer services, billing, metering. Whether these are fair or not should be assessed and agreed. But some % will be fair, and will be for every customer’s benefit and should be paid for.

My criticism of the Which? petrol pump pricing philosophy is that they have not given a balanced argument. It was partly based on our inability to multiply two numbers and add a third, and that energy companies could not show why they have fixed costs (my paraphrasing). Well, clearly they do have fixed costs, and many people can do simple arithmetic. I object to persuading people to jump on populist band wagons without giving them inbiased information to allow them to make a proper judgment.

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PeterM says:
3 December 2014

Elsewhere in this thread you wrote “base it on the cost of the infrastructure needed for supplying the property and then add actual consumption”

How does that work with your comment on Ebico “they buy wholesale stay lean and have very small overheads and probably no infrastructure costs” – I suspect the infrastructure costs are pretty much standard, region by region, but the pricing is done on a regional basis and cary markedly, wherever the energy firm has its HQ (after all, there’s no different pipe for gas from Ebico or SWALEC or British Gas etc to the homes).

I’d like to see the regional differences wiped out so the energy firms were all on the same level and not giving discounts to some areas while charging extra to other areas. Far from convinced the different unit costs are justified on a regional basis.

Profile photo of Patrick Taylor
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Peter M The quotes appear to be from my posts.

Regarding Ebico and giff-gaff and infrastructure costs. My guess is that they simply tender for a volume of gas or spectrum usage which a major company then sells to them as the supplier has a surplus.

For simplicity I suspect the originating supplier will have calculated some or maybe no infrastructure costs because overall it will be making money from the extra usage sold by these companies.

There is an academic piece from Australia on the “Death Spiral” of reduced electrical usage by households and businesses. The standing costs of the infrastructure will grow to a higher proportion of the single unit price. The people who use the most units will therefore save more money if they therefore take on LED’s , solar heating and generation, and heat pumps.

Having reduced their usage considerably the standing charge portion of the single unit price increases further ratcheting the cost benefits for changing. Standing charges need to be seen for what they are not hidden in unit cost of gas or electricity.

This the slide pack
http://www.aie.org.au/AIE/Documents/PER140429_Presentation.pdf

Profile photo of malcolm r
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Ofgem have published the latest Supply Market Indicator which shows where on average your money goes when paying your energy bill. In an average bill of £1326, £588 is the wholesale energy cost, £175 the supplier operating costs. (other costs are government-imposed charges, network costs, margin and VAT).The supplier operating cost includes metering, customer service, sales, marketing, billing, bad debts, depreciation and amortisation. These costs apply to all customers however much or little energy they take. If these costs are fair ( Ofgem should agree them) then the standing charge should be set to cover them; the only variable cost in your bill should be dependent upon the amount of energy you consume – the unit rates.

Profile photo of Lee Beaumont
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Thank you for posting that malcolm. Feeling very smug that my yearly bill is £47-£50 (including VAT) when the average bill of £1326 lol

On a side note, I do wonder if SSE/Ebico make any money on my account at all, and if so, i wonder how much it is….

(I use between 312 & 364 units per year)

Profile photo of malcolm r
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Lee – although your unit rate is likely to be very high compared to a “normal” tariff, your usage is so low as to make it the clear best choice. And I am all in favour of choice! For someone else on your tariff they need to be careful if they use more energy than expected – they will continue to pay a high unit rate and could end up well out of pocket. One feature of the now-defunct two tier tariff was that once you reached a particular usage you would automatically drop to a cheaper tariff, so avoiding continuing high cost.

Profile photo of Lee Beaumont
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“although your unit rate is likely to be very high compared to a “normal” tariff

My unit rate is 15.91, I’m not sure what the normal rate is for Yorkshire if im being honest, the last time I checked NPower is was 16.02, not checked the rest.

Profile photo of malcolm r
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Lee, your tariff is 53% higher than my unit rate.

Profile photo of Lee Beaumont
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I didn’t know you was in Yorkshire too? You must have a very very cheap rate for Yorkshire – well done. Do you pay the normal 18p daily standing charge too?

(as you know I don’t pay a standing charge)

Profile photo of Lee Beaumont
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Yorkshire (my postcode anyway):

NPower – Unit rate: 16.79 p/kWh – Standing Charge: 26.586 p/day

That is the next cheapest for me (as shows by the switch.which.co.uk website) after what I pay now to SSE @ 15.91 p/kWh and a 0 standing charge.

Profile photo of malcolm r
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Lee , no i’m not in Yorkshire. I was just drawing attention to the difference in unit rates. I think Ebico in my area is around 18p.

Member
PeterM says:
3 December 2014

Call me nosy if you wish, but I’d be interested to know which region you are in, please, Malcolm.

I am quite surprised Ebico has as large a difference between regions as that. About 5 years ago when I lived in N Wales, I checked British Gas prices, and found 18% or 20% differences.

I am curious (and feel much of the difference is unjustified) because when I look at rates from different firms (some comparison sites helpfully offer PDFs etc for downloading and the Co-Op 2017 tariff is online. It’s clear to me that the “per unit” markup isn’t based on the cost of transporting the energy (else it would cost the same night or day) but the regional daytime charges from Co-Op reflect the range from other energy firms.

That’s why, with the exception of N Scotland, the night rate varies between 8.32 and 8.99p (ie 0.6p) but the day rates range from 16.54 to 19.89p (3.45p)

Guess where I live (North West, with the highest daytime rate).

So, when Ebico in your area charges over 50% more than your supplier, it makes me ask, who supplies you?

Profile photo of malcolm r
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Peter M, I last looked at Ebico when comparing tariffs on the Which? Switch site that I use for choosing my own tariff. I pay a standing charge plus unit rate because that gives me the best deal for my consumption. Using my “effective” unit rate, if I combine the two costs, Ebico is probably around 30% more. Ebico clearly has its own fixed costs to recover out of just a unit rate so must charge significantly more per kWh. The point I was making was that having different methods of charging gives consumers a choice – and in a very low user’s case paying a high unit rate with no standing charge is clearly a good choice.

Profile photo of wavechange
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You don’t need to compare many energy tariffs to see that standing charges differ between suppliers and are clearly not related to the actual costs of the infrastructure needed to supply us with energy.

I am not proud to live in a country where we allow low users to subsidise higher users of energy via standing charges. The people who make the decisions are hardly likely to be the ones who struggle to pay their energy bills.

I suggest that the infrastructure is funded through taxation and we all pay for the energy we use.

Profile photo of malcolm r
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I take “infrastructure” as including pipelines and wires used for distribution. Network companies charge for these by how often they are used, how much energy is transported, and the distance covered from generation source to centre of demand (so locality will affect the cost). The charges are regulated by Ofgem. The costs make up around 25% of an average bill. These costs are consumption related so do not fall into the “standing charge” category which should only reflect the fixed business costs of the energy supplier.

There should be no subsidy, either by low users to high users, nor high users to low users. Subsidy should be from Government via benefits and tax, not private business. We should pay the energy companies actual costs, and these should be vetted and transparent. We should also be offered tariffs that give us a choice as has been discussed above.

Profile photo of wavechange
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I suggest that you compare some of the tariffs on offer. When I did this, I found significant differences between standing charges, and of course there are tariffs with no standing charges but higher unit prices. Energy supply is an utter mess, which is why there is so little public confidence in the sector.

Profile photo of Patrick Taylor
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North Sea gas comes ashore at three places on the East Coast so my guess would be that the pumping of the gas to local areas will be cheaper than to Liverpool.

What does your research show WC? You make claims but provide no detail.

As for paying infrastructure costs through taxation this suffers the same problems that
a] You disguise real costs from the public
b] You subsidise holiday homes
c] People who are out all day from their London flat and go to their country home at weekends.

Options could include standardising the rate for the entire country benefitting rural dwellers and certain areas to the detriment of others.

It could be a means tested payment which also looks at the property of the applicant and how they use power. I have a neighbour who at all times seems to have a window open – a ventilation system where for 60watts an hour you exchange stale air with fresh air using the same piping to pre-heat the incoming air would be a good measure.

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Most of the public are not aware of the costs of the NHS but is that a reason to get rid of it?

I doubt that many of the contributors to Which? Conversation are those who have to think if they can afford to turn on their central heating or are seriously worried about how they will pay their next energy bill (or the last one, if they are in arrears).

We certainly must not subsidise those who own second homes, but there are various options for preventing this.

Meanwhile our country will go on letting poor people subsidise the energy bills of those who have pots of money through standing charges.

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DT, I agree costs should not be disguised or artificially imposed. Infrastructure is an energy supplier’s issue, not for government. Costs should be transparent and properly monitored by Ofgem. Different energy companies should have different costs, so should visibly be part of the competitive deals on offer. Some may decide to structure their tariffs to suit high users, and some low users (unit only tariff for example). Then we can choose.
It’s worth remembering we have below average electricity prices, and well below average gas prices, compared to the rest of Europe.

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This conversation is open to all – who, from other conversations, seem to cover the spectrum from less well off to wealthy. Many of us will watch our bills and consumption – I certainly do.
Poor people may be high energy users for all sorts of reasons – health, house insulation (lack of), age, family size etc. I don’t want to see them subsidising low users – who may be wealthy couples both working, modern home, out all day. This poor vs. wealthy argument does not correlate with energy consumption. Appropriate assistance / subsidy for those unable to heat their homes properly should be provided through the benefit channel, not from energy companies.

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Malcolm – As I have said many times before, those who have high energy needs for health or other reasons should be eligible for support if they are short of money. The fact is that those who are really struggling are being forced to subsidise people with plenty of money thanks to standing charges. Perhaps it is time to consider the less fortunate members of society.

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wavechange, “Perhaps it is time to consider the less fortunate members of society”. I do care about other people. I generally respect your views, even where we disagree, but the implication I do not care is, I think, neither a fair nor appropriate response to my comment. I have on many occasions proposed that those who need help should be helped. It is how we achieve it, and arbitrarily using high energy users to subsidise low, or vice versa, when neither classification is necessarily related to ability to pay, is not the way to do it – in my view. Please disagree with that, but not with my moral status.

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Hi both, perhaps it’s time to step back from this discussion and return to it later?

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Malcolm – My comment is not meant to be personal. I enjoy our discussions, even though there are a few things we disagree on. We can certainly agree that there is some work to be done to improve our approach to renewable energy.

Consider people living in large houses with high energy bills but plenty of income. The standing charge means that their energy is subsidised by smaller users who are struggling to pay their bills. I believe this is unethical. The information available on the Which? Consumer Insight website shows that energy prices are the main concern of our population. I’m very glad to support Which? in trying to sort out problems with the energy sector.

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Patrick, you are right. Perhaps both these comments are best removed from the conversation? Certainly remove mine.

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Sorry. You are welcome to remove mine too.

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I don’t think that’s necessary 🙂

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🙂

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I am all in favour of people paying less for energy but my view is that Which? could perhaps put some effort into helping people reduce consumption.

The added benefits of heavy curtains , wooden shutters, newly available double glazing with triple glazing performance, the cost advantages of heat punps, clothing that keeps you warm, do you really need to heat your mani room to 21C, thermal surveys of houses, elderly people banding together to maximise purchasing power and provide mutual support.

Just a few ideas and given the membership numbers you would think sufficient support would make this an interesting project.

MR –

I wonder whether when we are all Europeans that gas prices will be made uniform over the EU.

Currently we are just in the bottom half – beaten by many ex-Communist countries who may have Russian sweetheart deals.

Electricity – we are actually expensive compared to the majority of the EU. And we have a low fuel VAT rate compared to many.

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I hope we can all agree on the many ways of saving fuel and I would definitely support effort by Which? to help us save money and make us more environmentally aware.

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Removing comments is generally a bad idea as many readers [!] get upset if they think the Board is tampered with. Judicious light policing works wonders but in a well behaved Board such as this mercifully unnecessary.