Electricity bills baffle 80 per cent of UK customers

Confusion over the cost of heating and lighting a home is leaving consumers paying up to £180 more than they need to, a new report published today reveals.

The news comes ahead of tomorrow's deadline set by energy regulator Ofgem for its consultation into tariff complexity.

Four out of five who believe they are on the cheapest tariff are not, according to the research from independent energy supplier Co-operative Energy.

It shows that dual fuel consumers who think they are on the cheapest tariff could actually save £180 a year, while those who think they are on the cheapest gas or electricity deal could save £107 a year.

Meanwhile, people have little clue how much their home energy actually costs with customers under-estimating the actual cost of bills by an average of £334. UK consumers thought their bill came to £945 last year. Government figures reveal that the average energy bill was in fact £1,279.

Nigel Mason of the Co-op said, "At a time when energy prices are going up and people have less money in their pockets, we need a better way for customers to be sure they are getting the best deal."

The firm has proposed "Six Big Reforms" to make it easier for customers to understand how much they have to pay for their heating and lighting.

There should be a limit of two open tariffs per payment method with one being a standard variable tariff. The benchmark tariff – against which the price of all other variations should be compared – must be online, dual fuel, and direct debit.

"Ofgem's intentions for tariff reform published last month are positive but don't go far enough," said Mr Mason. "The proposals 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."