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Do you think you could beat our tariff test?

Energy tariffs in petrol pump style

We found only one in 10 people could identify the cheapest deal when presented with a range of standard energy tariffs. When shown the tariffs in a simpler form the number shot up to nine out of 10.

Imagine pulling up to a petrol station and instead of seeing that the cost of your petrol is going to be around 142p per litre, you’re presented with a baffling array of figures that are all displayed and calculated differently.

You could have a fixed charge and then add the price per litre on top, or you could have different levels of price per litre determined by how much you fill up. Once you’ve decided this, you then need to work out if you’d be better off on a ‘standard’ deal, or if fixed or variable deals are the way to go. Think it’s a good idea? I thought not. Just imagine the queues!

Gas and electricity pricing

So why do we have this complicated, confusing system for our gas and electricity? The latest investigation from Which? shows that only 8% of people could work out the cheapest tariff when presented with six energy deals. The energy suppliers have each adapted their tariff and pricing structures for their own deals so what we’ve been left with is a market that’s now so complicated it’s nearly impossible to find the cheapest deal.

So, 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 each year.

We think that consumers have the right to simple, easy-to-compare gas and electricity prices. Why can’t it be simpler? If it was more like petrol pricing, and we had one unit rate we could easily compare all gas and electricity deals at a glance.

Price rises bump up bills

With headlines warning us of higher energy bills, and British Gas and Npower announcing price rises this week, it’s even more urgent that we can work out what the cheapest energy deal is.

Ofgem, the energy regulator, has spent two years reviewing tariffs to try to help you switch to get a better deal. It has promised to be bold and force energy suppliers to cut down on the unnecessary complexity. The question is, will it make the ‘bold’, but necessary, reforms or will it simply cave in under the pressure from industry?

If we don’t get the results we’re looking for, we’ll be demanding that the government steps in to simplify the market once and for all.

Comments
Guest
Roger Pask says:
31 October 2012

I organised a switch through USwitch web-site and filled in the forms including current usage both day and night (3600 kWh p.a.) and was immediately given a number of options which would ‘save me money’. I signed up to shift from Scottish Power to EDF on the basis of the recommendations. In a subsequent email from the web-site I noticed that the savings trumpeted had an asterisk. Digging around in the small print I discovered that the savings were on the basis of my using only a spurious 2032 kWh which bore no relationship to what I had told them and in fact offered an increase in costs as far as I could see. I complained. They then said ‘OK Switch to this instead’ – a seemingly random response to yet another supplier.
If these web sites are misleading potential switchers – telling them they could save money if you used less (rocket science) but letting them think they are offering genuine benefit – and then pocketing money from the big 6 for organising a switch; then they also need taking to task along with the rest of what is, apparently, an increasingly grubby industry.

Guest
Clive says:
3 November 2012

I am not able to benefit from duel fuel tarrifs as I am on LPG and mains electricity. I only wish I could pay mains gas prices. My gas usage (2 people, 3 bed house) is around 3500 litres a year and at the present price I will be paying about £170 per month. I have just moved my electricity to a fixed rate (before the price rises) and pay just over £40 per month.
Can you please tell me how I can compare therms or energy efficiency between LPG and electric? The price for gas is 58.90pence per litre and electric is based on units. In other words, should I heat my boiler with with my immersion heater or should I continue to use the gas (condensing) boiler and should I try to use one fuel over another whenever possible?

Guest

LPG has always been the most expensive fuel, but of course you also have the storage tank too. Oil has an undeserved reputation for high price, but of course, you need a tank etc.
To compare prices accurately you must work in terms of calorific value for each fuel. By law this has to be provided for each fuel, but you’ll need good arithmetic to convert them all to comparable units. suggegest kW hours. ! litre of oil at present 70p yeilds about 10 kW hrs depending on boiler

Guest

Clive, as I understand it the calorific value of LPG is around 25 MJ/litre. As 1 MJ (Mega Joule) is equivalent to 0.28kWh, 1 litre of gas = 7 kWh. 1 kWh (kWatt hour) is one unit of electricity. So your litre at 59p is equivalent to 7 units at say 14p = 98p of electricity. Assuming your boiler is a high efficiency one I’d stick with gas, providing your water temperature is controlled as well with either fuel. Hope your tank is also well insulated.

Guest
Andrew Sangster says:
4 November 2012

Comparing the different tariffs isn’t difficult, but it is time consuming and life is too short to spend time regularly trawling through the options, even with the help of the excellent web services such as Which’s (I used it recently to shift supplier). I don’t mind there being tariffs that provide a lower average charge for different levels of usage, or there being discounts for online billing or loyalty, but there should be a straightforward way of viewing the charges from each supplier in a standard format. At the moment you have to go through a full quote even to see the kwh charges. So, don’t push for oversimplification, but do push for a standard format that has to be readily accessible.

Guest
Colin says:
7 November 2012

I can fully endorse the move for simplifying tariffs and more transparency, but I am worried that those of us on specialised, favourable tariffs (I am on one for ‘wet’ electric central heating where the central heating only is on its own dedicated tariff with highly competitive rates) get overlooked and could end up with vastly increased bills because we are put on one of the fewer simplified tariffs designed for the mainstream.

Guest

If your wet heating uses off-peak electricity to store heat for use during the rest of the day then you should keep a lower tariff – the generators need load during the night to make economical use of their plant, and the incentive should be lower unit charges.
There is not be much scope to use off-peak other than heating, washing, dishwashers. In my case. and I suspect many others, the possible load is not sufficient to make Economy 7 viable – I need 40-50% of my load in the small hours to make it cheaper (on Economy 7, daytime units cost more than a standard tariff).
We should all be encouraged/educated to use higher-power appliances off peak where possible to use this excess capacity – but there needs to be an incentive. Just abolish Economy 7, keep the normal daytime tariff and apply an off-peak tariff for whatever units are used by everyone.

Guest

Ah ha! Garbage in – garbage out…
TARIFF ERRORS on the WHICH? Switch service render price comparisons meaningless.

I have used the Which? Switch service over the last couple of years to check the latest deals on gas and electricity. With their help, I’m now with Ovo Energy on a dual fuel fixed tariff that’s due to
expire in mid November 2012.

Thanks to Ovo’s clear pricing, my total annual consumption data, energy costs and tariff rates are
very easy to work out and codify. Having carefully entered accurate details about my current tariff
and energy consumption data on the Which? Switch comparison site, I noticed that their tariff data
(i.e. the fixed charge rates for gas and electricity and the standing charges) are inaccurate. In effect, these data errors translate into estimates of my total energy consumption that are £58 dearer than they really are.

Now, being £60 adrift isn’t a big deal in the greater order of things, but when you take into account
that three energy suppliers are competing for my custom within a margin of about £50, you
will appreciate that the Which? Switch calculator is only as good as the data held in it.

Guest

Hi Peter,

I work on Which? Switch and first of all I’m sorry to hear you’ve had problems with a quote from the service!

The way that Ovo structure their tariffs means that we have a lot of different versions with different prices and similar names. I think the most likely reason for the difference you’re seeing is that you’ve selected a different version of their tariff from the dropdown on the current situation. Can I ask when you signed up? Because they regularly release new versions of their fixed tariffs without changing the name, we have to list each new version by the dates it was available to sign up for new customers, which can mean the list looks a little clumsy.

We regularly check our pricing against both suppliers’ ‘average bills’ and other comparison websites, and as part of our accreditation from Consumer Focus we are audited for our accuracy on a quarterly basis- so we really do our best to make sure the quote you get is as accurate as possible.

Again, I’m very sorry you’ve had problems with the service. If you have any further issues then you can always email wsqueries@which.co.uk and we’ll investigate any problems.

Guest

The cost savings predicted by an energy switch calculator are critically dependent on the accuracy of the tariff data they hold. Recently, I put a few energy switch services to the test, including Which Switch, uSwitch, and energylinx. All of these comparison sites displayed either incorrect information about the unit rates (p/kWh) for the gas and electicity that I am currently paying for or incorrect standing charge rates (pence per day). In some cases both the unit rates and the standing charges were incorrect. All of my figures were adjusted for the 5% VAT.

At best, these errors, no matter how small, will give a false impression about the savings that a consumer can enjoy, if any savings really exist at all. At worst, they will create more cunfusion and mislead.

Guest
larry Levin says:
14 November 2012

Uswtich discounts and “savings” are an illusion, the discounts assume that prices the spread between one provider and another does not change.

Guest
Mike P says:
11 November 2012

It worries me that only 8% of people could work out the best deal from your examples in the November Which. Is our education system so bad?
I don’t have a maths degree, but it took me just 10mins to work out the correct answer.

Guest

@ Mike P.

As a maths graduate, who did teach maths for several years, I have to tell you that the number of people who can do even the most basic maths without step-by-step instruction on each occasion they do it, is very small.

The greatest problem is that we have at least a generation of Grandparents, a generation of parents and a generation of students, who are all resistant to learning any maths and who are frightened of maths.

The most common cry from parents when I was teaching maths was “Oh (s)he’s frightened of maths – I’ve told [him/her] not to worry: I was too and I failed but it’s ok, we can use a calculator!”

Sadly, in that context, and given that energy companies, switching websites and others with a vested interest all try to make things anything but simple, I;m afraid I’m not at all surprised by Which?’s findings.

🙁

Guest
Len M says:
16 November 2012

I would take issue with your idea that you should be able to compare prices as easily as with petrol at the pump. If you apply similar criterea to those for comparing energy prices, you would need to mentally discount the price according to what Nectar, Tesco, or other points or freebies might come into the equation. More importantly, how much fuel will be used going to that particular petrol station, if it’s not on your regular route?
The plethora of tariffs we now face, has been driven by the utilities need to compete, something that the regulators have cried out for. A similar thing happened with building societies & banks, coming up with new, slightly different accounts, to attempt to attract more customers. More competition, more different accounts or tariffs, but what will happen if we try to reverse the pocess?

Guest

Hi Len,

I think you have conflated two issues here. Firstly, it is essential that all of the energy tariffs are transparent and easy to understand. When they are, consumers will feel encouraged to shop around and switch. The supply companies must also cut down the number of tariffs that are currently available (there are 400+ at present). Having fewer and simpler tariffs will not stifle competition as you suggest so long as genuine pricing competition exists in the market place for the energy sold to you. I think you will find that the free market works quite well on the petrol station forecourts.

Guest
Len M says:
16 November 2012

Hi Peter,
You say there are over 400 tariffs out there, but what’s the average per supplier? If we have fixed & variable rates, paper or on-line billing, Economy 7 or Standard, method of payment, Eco options, Two tier or standing charge, etc etc, they soon add up. Which ones do you want to do away with? What worried me last week, was that I saw Ofgem had proposed doing away with the two tier tariff, and having a standing charge.
I turn off my gas boiler in the summer for about 4 months, and use an immersion heater in a very highly insulated tank for hot water. This is heated mainly on the low rate on Economy 7. A daily charge for those 4 months, even with a slightly lower basic unit rate, would certainly put my bills up.
Arguably, of course, whether we use the gas or electricity or not, the supplier still has the cost of maintaining the infrastructure, and we should pay for it. I am sure that reducing the number of tariffs will only put prices up for the majority of people, even if some that are on very expensive tariffs at present may benefit.

Guest
Len M says:
16 November 2012

Which? and others have long been urging we consumers to switch supplier and save money. I have switched in the past, but have always been aware that my new supplier might just be about to put up it’s prices, and I’m sure this worry may prevent many people from making the move. (Frying pans & Fires come to mind).
One way out of this would be for Ofgem to only allow price rises once (or perhaps twice) a year, and for them all to be within say a 30 day window. There may need to be an exception, controlled by Ofgem, for unusual cicumstances. Once the window is closed, we could then compare rates, knowing that there would be no surprises just around the corner.
Unusually, the round of price increases this year have taken place over a fairly short timescale, and I felt confident that when I recently switched from Scottish Power to EdF, I had chosen the best deal.

Guest
R. Harris says:
23 November 2012

I knew I wanted to switch to Cooperative Energy but I didn’t want the bother of comparing prices. I got an email from someone at Co-op Energy which said ‘You will have to go through the comparison first, our system doesn’t allow you to just switch. Sorry for the inconvenience’ Some system! Sorry to say, they’ve just lost a customer.

Guest
C.Nicol says:
19 January 2013

my problem is, that when asking for quote, there is no company will give me the price per klw, nor will they let me know the thresholds. They just tell me what they think they can save me, I pefer to work out for myself whether I am saving or not. Is there any way I can get the information that I want?

Guest
larry Levin says:
19 January 2013

You cannot have a price per/klw because the prices vary with usage, you could tell them that you are using 3,400 klw hours and then they can give u a quote for that. The complexity is designed so that the companies can rip-off people, Petrol has one price easy to compare. Petrol retailers margins are paper thin because the business is cut throat. The energy market deregulation in UK was designed by Enron a us corrupt corporation designed in a way to allow the public to be plundered. Enron was so corrupt they caused blackouts in california.

Guest

Switch with Which? gives you recommended suppliers and shows the unit prices (kWh) and whether two tier tariffs (with usage) or standing charges for the suppliers. My supplier – npower – shows all their prices on their website. Providing you record your annual usage of gas and electricity you can easily calculate your predicted spend, or rely on the switching site to do it for you. No mystery.

Guest
larry Levin says:
19 January 2013

the savings assumptions is based on usage and that both prices of current and new supplier remain the same.

Guest

larry Levin, you have to have a basis on which to make a decision – here it is your likely energy consumption based on your history. Prices are changeable, but you can also switch again if they do, or choose a fixed price contract. How would you approach this otherwise?.

Guest
larry Levin says:
21 January 2013

energy should be sold as a fixed unit like litres for petrol, or kilograms. then their would be clear comparison. they should create a unit of energy approximately the media consumption during one month. then people could easily find the cheapest. People who use heating oil and have a tank do not suffer the problems the average consumer does, they simple compare and buy the cheapest. the margins being earned by these energy companies are huge, since the government woke up to the rip off of the elderly the BG share price is down about 35% thats probably the size of the plunder of the vulnerable population. there are about 22 million households in the UK, if u can overcharge 0.87p a week from every home u would make £1,000,000, thats one billion pounds. also remember that the UK energy market deregulation was carried out along the lines lobbied for by Enron the massively corrupt US corporation, which had ripped off California to the tune of $5 billion.

Guest
Sel R says:
20 January 2013

Why do so many people think it is fair or reasonable to base future costs on previous consumption?
All sorts of factors can affect this, from personal circumstances to weather conditions.
Imagine the situation where I go to a supermarket to buy a tin of beans. The supermarket asks how many tins I’ve bought in the last 12 months, and quotes me a price for the beans.
After a further 12 months, the supermarket analyses my purchases, finds I bought fewer tins this year than last, and sends me a bill for a higher unit cost than they’d quoted.
There would be riots in the streets!!

Guest

It’s not a question of being fair or reasonable, it is logical. Whilst you can’t predict your next year’s energy consumption accurately, you can get close by looking at the last year’s; you can also take into consideration any change in circumstances you think likely (that is you, not an energy company). Based on current tariffs you can estimate your spend.
Apart from price increases, why should you expect to pay a higher unit cost if you don’t use quite as much – you will have agreed a tariff structure?

Guest
Sel R says:
22 January 2013

malcolm r
My analogy was badly described, what I was getting at, was the following:
If you use previous consumption as a guide to future costs, and use this to obtain the best deal to which you can switch, and subsequently find that your consumption differs from your base calculation, you may well have switched to a tariff which is not the cheapest.
Unfortunately by the time this becomes apparent, it is too late as you will already have incured the higher cost.
A larry Levin says, if all suppliers quote on the same basis (petrol being the good example), your future costs may be higher or lower than you had expected, but at least you would have the satisfaction of knowing that you had switched to the most competitive tariff available at the time.

Guest

larry Levin – energy is priced as a fixed unit – kiloWatt hour. A median or average monthly consumption helps no one – using your own consumption is the best estimate of your spend.

Guest
larry Levin says:
21 January 2013

i know that, but comparing kilowatt hours cannot help u make a comparison. since u have different prices at different usage levels and u have a standing charge. confusion is created on purpose. we do not have this when buying energy in the form of petrol. they should separate out standing charge which can be paid for separately and then have one fixed price for any amount of kilowatt hours u buy.

Guest

larry Levin, my npower bill shows the standing charge and the unit charge separately for both electricity and gas. The unit charge does not change with usage.
The other ways to pay are with two unit charges for each fuel, and no standing charge. The higher charge is made for a fixed number of units, and then after that limit has been reached the lower unit charge is used.
One or two companies have a tariff with just one unit charge each for gas and electricity, and no standing charge.
The choice on how you buy your fuel is up to you. From your estimated usage you need to work each cost out to find the cheapest. Or, of course, use Switch with Which to calculate the best deal for you.

Guest
larry Levin says:
22 January 2013

malcolm r, it is separated once you get a bill from them, but when comparing on online sites it is not. How easy is it to find the cheapest supplier, its very hard one person in 12 can figure out the various tarrifs and payment methods. But how easy is it to find the cheapest petrol/diesel ? its very easy electricity and gas should be the same way. Petrol profit margins are tiny, but utility bill margins are huge so huge they can afford to have an army of salesman ringing peoples doors to try and make them switch.

Guest

larry Levin, go to the Switch with Which site, enter your details and usage (or spend), and you’ll get a list of potential suppliers. Click on the tariff saving and summary and this will show the tariff details – standing charge (if there is one) and unit cost for the chosen fuels.
I use npower – on their site, put in your postcode and it will show prices in your area for all its tariffs – again, standing charge and unit cost shown separately.

Guest
Sel R says:
22 January 2013

And… go to the site and enter slightly different details, and you’ll get a different outcome.
As I keep saying you have to be able to predict your future consumption very accurately to get the best option.
And previous consumption will not necessarily be a good guide for future consumption as I have found out to my cost, – a significant and unpredictable change in personal circumstances for example.

Guest
larry Levin says:
23 January 2013

dear malcolm r, UK electricity and gas deregulation was designed by a corrupt US corporation, Enron, which went bust and was the largest US corporate bankruptcy, the system is designed so that thieves and exploit energy users, Enron caused blackouts in california. Enron was going to be sued for $5 billion, so what did they do, they hired arnold schwarznegger and forced a recall motion on the governor who was suing them they removed him and installed Anrold schwarznegger, and magically the $5 billion lawsuit dissapeared.

Uswitch “savings” are not real they assume that prices and usage will not change, why not have a system where you “fill” your energy tank with gas/elec in the same way u fill your car. so you go online and see a list of all those offering to sell xxx units of gas/elec and simply buy the cheapest one, and the standing charge can be separately paid for.

Guest

Set R, I think the problem you describe can occur when you are at the lower end of consumption, and the choice between paying a two tier unit cost or a standing charge plus single unit cost gives around the same total bill. If your usage then goes up or down from your assumption you may find the change is not beneficial. I suspect that unless you get your consumption badly wrong, you should not lose too much.
For those where the initial choice is clear cut, then I don’t think the problem you describe is likely.

Guest
Sel R says:
22 January 2013

Yes, but why the unnecessary complication?
It is unique to the energy service industry that this method of charging is used.
If it’s such a good idea, why aren’t all goods and services costed on the same principle?

Guest

Set R, that’s a question that has been debated widely through most of these energy conversations. There appears to be no black and white answer.

Guest
larry Levin says:
23 January 2013

the black and white answer is corruption, read my answer above regarding Enron