There may be no such thing as a free lunch, but is there such a thing as free energy? If you listen to Eon there is, but scratch beneath the surface and you’ll find it might not be as good as it sounds. Surprised?
Launching today on a switching site, doorstep or shopping centre stand near you is Eon’s new two-year “Energy Fit Plan” tariff.
It comes with a handy two free months of energy – just the ticket with winter approaching and energy prices rocketing.
The truth about the Energy Fit Plan
Sadly, a quick perusal of the small print tells a somewhat different story. Although the Energy Fit Plan is only available to customers who pay by direct debit (another story for another time), the 8% direct debit discount offered on all of Eon’s other tariffs has mysteriously disappeared on this one.
But don’t panic! You’re still going to get this 8% discount – it’s just been repackaged as – you guessed it – two months “free” energy.
Eon told us that it developed the Energy Fit Plan in response to feedback from its 28,000-strong consumer panel. This may be so, but research by Which?, Ofgem, Consumer Focus and seemingly anyone else with a stake in the energy market that isn’t an energy supplier, suggests that consumers are completely baffled by energy tariffs.
People are unlikely to say no to the idea of “free energy”, but can we expect them to make an informed decision if they’re not aware that the direct debit discount is a trade-off?
Exit fees in disguise
Personally, I’d prefer to get my 8% discount on every quarterly bill, rather than a free month of energy in the 12th and 24th month. This is because I use energy all year, have no choice not to use it, and like to budget on the basis of having broadly the same outgoings each month.
Also, I like the idea of being able to shop around for another supplier if my prices go up or if I’m receiving poor service. So what’s going to stop me leaving at the first scent of a better deal elsewhere? You guessed it – my free energy.
So, the free energy isn’t just my direct debit discount in disguise, it’s also an exit fee. Why? Well Eon claims there are no exit fees on this tariff, but if you leave before you’ve benefited from your free months’ energy, you jeopardise that discount.
Given that Eon estimates the value of one free month’s energy at £105 for the average consumer, this seems like an excessive price to pay for switching. On the nearest comparable tariff, Scottish Power’s Platinum Fixed Energy January 2014 – exit fees are a much more palatable £50.
Free energy or regular discounts?
So, what do you think? Would you prefer a month’s free energy or a discount on every bill for paying by direct debit and an exit fee for the privilege of fixing your prices?
Or would you prefer energy suppliers to go the whole hog and agree to Which?’s proposals for simpler energy tariffs? This would mean a common format for all tariffs and all discounts being included in the unit price so that you save as you spend.
Energy suppliers could still be innovative under our plans – there are a lot of good things about this Eon tariff, such as the free energy monitor, online advice on saving energy, and Tesco ClubCard points. But the marketing “creativity” that makes tariffs so hard to compare is something we think consumers could do without.