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Co-operative Energy: we all need simple energy tariffs

A solved maze

We’re campaigning for simple energy prices at Which?. In this guest post, Nigel Mason of Co-operative Energy explains how its research shows eight in 10 people don’t realise they’re paying more than they need to.

Energy is an intrinsically simple product. You need electricity to light your home and often gas to heat it. Of course there are a number of complexities to getting that energy to your home, but that is a poor excuse for the multitude of complex tariffs that now face anyone wishing to find a better deal.

The regulator, Ofgem, has been looking to simplify tariffs and has a number of strong proposals that look to achieve this. However, there are a number of proposed reforms that we feel don’t go far enough. So this week we called on energy customers to make themselves heard ahead of the end of the public consultation.

Let’s keep it super simple

On Monday we launched a campaign we called #Big6KISS, suggesting that people take to Twitter to share their views with Ofgem and calling on energy companies to ‘Keep it Super Simple’. We’re also backing the Which? campaign for simpler energy prices.

To provide some food for thought we have also proposed ‘six big reforms’ in a simple guide to some of Ofgem’s proposals. We hope that this will help to bring attention to an important issue that is leaving consumers out of pocket.

Co-operative Energy’s six big reforms

1. Limit of two open tariffs per payment method; one to be a standard (‘evergreen’) variable tariff.

2. The benchmark tariff – against which the price of all other variations should be compared – must be online, dual fuel, and direct debit.

3. Surcharges for variations from the benchmark (offline, single fuel, not direct debit) must be expressed as £/year for the average consumer.

4. No bundled tariffs.

5. The underlying supplier of ‘white label’ tariffs must be prominently labelled.

6. Commissions payable to switching sites and collective switching schemes must be disclosed.

The impact of complexity

We carried out some research to better understand the issue. We found that more than eight in 10 people who believe that they are on cheapest available tariff are paying more than they need to – an average of £180 per year.

The proposals published by Ofgem ahead of the consultation mean that there will still be at least 72 tariff options per supplier, and the possibility of over 1,000 tariff permutations still in the market. A number of worrying new loopholes have opened up too, such as suppliers being allowed to create an unlimited number of special tariffs just for collective switching schemes. Far from simplifying the market for consumers, these final proposals may even enshrine the current complexity in a brand new rule-book.

I hope that people will speak up and that Ofgem will take every opportunity to do away with complexities in energy tariffs. It’s going to become increasingly important that people feel they are getting a fair deal. We’ve shared our suggested ‘six big reforms’, but what would you propose?

Which? Conversation provides guest spots to external contributors. This is from Nigel Mason, Business Development Director at Co-operative Energy. All opinions expressed here are Nigel’s own, not necessarily those of Which?

Comments
Profile photo of wavechange
Member

For years I have payed for energy by direct debit and provided meter reading promptly when asked to do so. I want to pay for what I use and not make payments that almost always end up with me building up a large credit balance. If there is a good reason why this is impractical or a genuine reason why this would cost more to implement, perhaps someone could explain. I appreciate that some customers would find it easier to budget with fixed monthly payments, but I don’t want this and I know many others who are exasperated by energy supply companies holding on to their money.

I am in process of switching to a new supplier, which is not going well, and I have already been told that they will allow me to build up a substantial credit balance before taking any action. Having simple tariffs is vital, but additional payment for using the non-preferred payment method should reflect the actual cost.

I much appreciate efforts to make energy tariffs simpler and hope that the companies will look at sites such as Which? Conversation to discover what the problems are. I really don’t think there is a need for anyone to Tweet anything.

Profile photo of worldsroom
Member

I have been having a similar sort of problem since the solar panels were fitted to my roof. First Utility are trying to insist that I pay bills based on their estimate of my consumption of electricity despite my having submitted readings when requested on-line. I cancelled my Direct Debits for this reason and have made it clear I will not pay bills based on estimated readings.

A technician recently visited me to fit a new meter at the request of First Utlity and I asked him what would happen about my credit balance when the new meter was fitted. He told me he would have to check if I needed a smart meter and return – so far he has not done so.

The estiated readings I received were grossly inflated, especially in view of the fact that electricity consumption is obviously likely to be lower during the Summer months. The suppliers justify this by saying that the credit balance will help with larger bills during the colder months of the year but I really do not think that this justifies inflating the readings to the extent that they have.

Has anyone else had this experience after having had solar panels fitted? The whole point of these is surely to try and reduce bills as well as for environmental reasons.

Member
RAB, RINGMER says:
27 April 2013

Whose side is ofgem on!! I cannot for the like of me see why they are not fully on the side of us the consumer and Which. They must be aware of what we want, but seem to turn their back on the public wants and Which magazine, which makes me think they are not fit for purpose. We badly need someone like Which to be the controller of these fatcat companies.

Profile photo of dave d
Member

NO NO NO NO NO NO!!!!!!!

“The benchmark tariff – against which the price of all other variations should be compared – must be online, dual fuel, and direct debit.”

NO!!!!!

This is all absolutely wrong and utterly immoral. I am disgusted at the Co-Op of all people suggesting that this should be the benchmark tariff.

The benchmark tariff, if there is going to be any honest attempt to claim a moral and ethical position, let alone “the good of the customer”, on this, MUST be, off-line, and cash or cheque payment. Whether it is dual fuel or not is, as far as I can see, not especially important.

Why am I saying this?

The most vulnerable in society – generally speaking, though not exclusively, the elderly and the infirm plus the long term unemployed and the disabled – are frequently unable to access computers for online account management and often denied bank accounts from which Direct Debits can be taken, They are also, almost invariably, least able to afford to end up paying more than they should and building up credit balances with suppliers.

Therefore the baseline or benchmark absolutely must, at all costs, be a tariff which is accessible to those with no computer access, limited funds and quite possibly a narrow choice of bank accounts (or even no bank account).

It is morally reprehensible that energy companies, the government, OfGEM and even Which? do not seem to have either grasped this fact or else could not give a toss about it.

I’ve had the gravest doubts about the sincerity of the Co-Op’s ethics for a long time and Nigel Mason’s point 2 simply makes me more certain than ever that the co-op is no better than the big 6, or anyone else – specifically in it for their own profit and beggar everyone else.

I for one would never dream of touching the Co-Op or the big 6 for energy … and I’m not elderly, infirm, disabled, unemployed or without computer access. I just have a social conscience.

I’m honestly so angry to read Nigel Mason making this point hat I can barely type for rage – you are not fit for your job Mr. Mason.

Member
mr.rl.lambeth says:
4 July 2014

I think standing charges should be charged on how much fuel you use why should I pay the
same as some one who uses a lot more than me.