Savvy Money: We still need more clarity on complex charging for energy

New plans to give a fairer deal to consumers do not go far enough to clear up the confusion

Last weekend I was involved with some filming for a BBC consumer programme, helping people in a "pop-up" advice shop. And what was the gripe that came up time and again? Energy bills.

People couldn't understand their bills, didn't know whether or not they were being overcharged by their energy company and, in some cases, were convinced they were getting ripped off. Comparison website uSwitch reckons that up to 70 per cent of customers are overcharged by the big energy providers at some point.

The government and the energy regulator Ofgem have promised to get to grips with the energy market and to sort it out so that consumers get a fair deal. But will it deliver what's expected?

Limiting the tariffs

One of the main parts of Ofgem's plans is that less really is more.

There's been a lot of publicity about the fact that energy companies will only be able to have four core tariffs.

However, they will still be able to offer a discount if you pay by direct debit, for example, or manage your account online. That means not four but 48 tariffs, as well as bundled deals (adding in boiler servicing, for example).

Better deals for new customers?

According to Co-operative Energy (one of the challengers to the big six energy companies), suppliers will be able to offer special deals for new customers who are part of a collective switching scheme.

These deals can't be offered to existing customers, so could mean next-door neighbours with the same energy consumption, with the same company, could pay different amounts for their energy.

Clearer charges

What is undoubtedly good news is there will just be one unit price and a standing charge, rather than the current, rather absurd, system where people who don't use much energy may effectively be penalised by being charged a higher rate per unit than those who use a lot.

Dead tariffs killed off

And dead tariffs will meet a sticky end – also a good idea. These are deals that customers can be put onto when, for example, a fixed-price tariff ends but that aren't available to new customers (often because they're not competitive enough).

Simplification, simplification, simplification

Some energy companies, including nPower and British Gas, have already started to simplify their tariffs (funny how this becomes a priority when tougher regulation is around the corner). But last week EDF Energy said this simplification should go further.

It believes that so-called petrol forecourt prices, namely, a single price for a unit of gas or electricity, rather than a unit price and a standing charge, would make it easier for consumers to compare what's on offer. It's backed by the consumer organisation, Which?, which says eight out of 10 customers find it easy to spot the cheapest deal using this price system.

However, Ofgem (and British Gas), aren't in favour of it.

Best tariff

And should energy companies tell us about the best tariff or make sure we're on it? David Cameron championed the latter late last year, but it's not in Ofgem's plans. All a company would have to do is tell you the best deal it offers.

A good deal?

So, where do these plans leave us? Well, I'm not convinced the idea of four core tariffs is simple enough – not if it actually means dozens of tariffs per company. Isn't that what they do now?

And I'd like to see better protection for customers who pay by direct debit. At the moment if you pay for your gas or electricity by direct debit (which the companies love) you can have trouble getting a refund if your account is in credit. Some suppliers are worse than others for this. I know because I get emails about it on a regular basis.

Verdict

Simplification of the energy market is long overdue, but the current plans still include plenty of complexity. And, over the years, energy companies have got confusion marketing down to a fine art, so I'm sure any profit they relinquish because their tariffs are "simpler" will be more than made up elsewhere.

savvywoman.co.uk

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Arts and Entertainment
Lou Reed distorted the truth about his upbringing, and since his death in 2013, biographers and memoirists have added to the myths
musicThe truth about Lou Reed's upbringing beyond the biographers' and memoirists' myths
Arts and Entertainment
Lena Headey looks very serious as Cersei Lannister in Game of Thrones
tvGame of Thrones season 5 episode 1 review
News
people
News
Ed Miliband received a warm welcome in Chester
election 2015
Life and Style
Apple CEO Tim Cook announces the Apple Watch during an Apple special even
fashionIs the Apple Watch for you? Well, it depends if you want it for the fitness tech, or for the style
News
i100
News
people
News
Astronauts could be kept asleep for days or even weeks
scienceScientists are looking for a way to keep astronauts in a sleeplike state for days or weeks
Sport
Fabian Delph celebrates his goal
footballChristian Benteke and Fabian Delph turn semi-final after Liverpool goal
Life and Style
Model wears: top £29.50, leggings £25, jacket £29.50, bag £25, all marksandspencer.com
fashion
News
people
Arts and Entertainment
The new-look Top of the Pops could see Fearne Cotton returns as a host alongside Dermot O'Leary
music
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

    Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

    £50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

    Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

    £13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

    Ashdown Group: Training Programme Manager - City, London

    £40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

    Day In a Page

    Armenian genocide: To continue to deny the truth of this mass human cruelty is close to a criminal lie

    Armenian genocide and the 'good Turks'

    To continue to deny the truth of this mass human cruelty is close to a criminal lie
    Lou Reed: The truth about the singer's upbringing beyond the biographers' and memoirists' myths

    'Lou needed care, but what he got was ECT'

    The truth about the singer's upbringing beyond
    Migrant boat disaster: This human tragedy has been brewing for four years and EU states can't say they were not warned

    This human tragedy has been brewing for years

    EU states can't say they were not warned
    Women's sportswear: From tackling a marathon to a jog in the park, the right kit can help

    Women's sportswear

    From tackling a marathon to a jog in the park, the right kit can help
    Hillary Clinton's outfits will be as important as her policies in her presidential bid

    Clinton's clothes

    Like it or not, her outfits will be as important as her policies
    NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

    Who's monitoring the outsourced NHS services?

    A report finds that private firms are not being properly assessed for their quality of care
    Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

    Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

    The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
    How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

    How do Greeks feel about Syriza?

    Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
    From Iraq to Libya and Syria: The wars that come back to haunt us

    The wars that come back to haunt us

    David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
    Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

    Too busy to surf? Head to The Pool

    A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
    Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

    UK's Major Tum to blast off on a spice odyssey

    Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
    John Harrison's 'longitude' clock sets new record - 300 years on

    ‘Longitude’ clock sets new record - 300 years on

    Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
    Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

    Let the propaganda wars begin - again

    'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
    Why Japan's incredible long-distance runners will never win the London Marathon

    Japan's incredible long-distance runners

    Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
    Why does Tom Drury remain the greatest writer you've never heard of?

    Tom Drury: The quiet American

    His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace