Were your winter energy bills shockingly high? If you’re thinking of switching suppliers to save money, the vast array of tariffs on offer might put you off. That’s why we need genuinely simple energy prices.
This spring may have been the coldest for more than 50 years, according to provisional figures from the Met Office. By June, I bet most of us have turned off our central heating. But I can’t have been the only person turning up the thermostat on the odd cold evening over the past few weeks.
I’ve tried to avoid doing so. After a longer and colder winter than usual, my gas bills have rocketed. Meanwhile my fixed-term energy deal came to an end earlier this year and I’m now on a more expensive standard energy tariff.
Obviously I need to get onto Which? Switch and find myself a cheaper energy deal. And yet, like many people, the thought of comparing and contrasting different energy company offers makes my heart sink.
This is one of the paradoxes of the energy debate. Energy prices are consumers’ top financial concern. Yet very few people switch supplier to save on their bills. In fact, in a new Which? survey, more than half of people said that they had never compared their energy tariff with others on the market to check if it was worth switching.
We need simplicity to get people switching
We’ve long thought one of the reasons for this is the overly complex way that energy tariffs are structured and priced. And that’s why we’ve been calling on Ofgem and the government to introduce a single unit price for energy tariffs – it needs to be as easy as possible to spot the cheapest deals at a glance.
In October last year, the Prime Minister promised to intervene in the energy market and force energy companies to put their customers on the best deal for them. We supported these plans, but warned that they would not work without the additional introduction of simple energy prices.
Our new research shows why the current proposals from Ofgem do not go far enough. When we asked people to identify the cheapest deal for them from a range of tariffs using Ofgem’s tariff comparison rate (TCR) proposal, just three in 10 got the right answer.
This shot up to eight in 10, when the tariffs were presented in the style of a petrol forecourt display, using a single unit price. Two thirds of people surveyed said they preferred the single unit price model, compared to just one in 10 for the TCR.
With MPs debating the government’s plans for energy market reform this week, there is still time to improve these proposals. But this will require the Prime Minister to intervene again and make sure that his energy reforms work for hard-pressed households.