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?