Energy tariffs 'too complicated'

Energy tariffs are too complicated for many customers to understand, a consumer watchdog has said.

Which? asked 36 members of the public to calculate the cost of a domestic energy bill using information from suppliers' websites but the task proved too difficult for all but one of the group. An accountant was among those who failed the test.

Richard Lloyd, executive director of Which?, said: "People tell us they want to be able to check they're paying the right price for their energy, and when even an accountant struggled to calculate a bill, it shows it's far too complicated.

"There are straightforward ways that consumers can cut their bills - for example by switching to online deals or paying by Direct Debit.

"But that won't help people to pick the best tariff for them.

"So Which? wants the regulator to stamp out excessively complex tariffs, across the board."

Twelve of those taking part in the test used the British Gas website, while 12 used Southern Electric and 12 used Eon. They were chosen for being the largest dual fuel suppliers.

The only person who correctly worked out how much they should pay a year, using standardised data rather than their own bills, was a company director.

Two companies which have a simpler tariff structure, Ebico Energy and Co-operative Energy, were also investigated. Of the 28 people who tested their websites, 10 successfully calculated the bill.

Keith Pledger, chairman and head of mathematics at exam board Edexcel, oversaw the test for Which? and said that even A-level maths students would find calculating a bill with British Gas's standard tariff a difficult task.

He said: "To calculate the cost, you needed first to understand the tariff's complexity, find the information on the website, apply several processes and make decisions on what calculations to do and when to do them.

"Grade A GCSE students would find this very challenging and many would get it wrong. Even A-level maths students would struggle.

"It's unrealistic to expect the public to be able to find the best deal when faced with such complex tariffs.

"Most people certainly wouldn't be able to find the correct cost for the energy they use."

Which? has launched the Affordable Energy campaign and is calling on Ofgem to bring in a simple format for all tariffs, to allow customers to compare them more easily.

Tim Yeo MP, chairman of the Energy and Climate Change Select Committee, said: "I welcome Which?'s investigation into the complexity of energy tariffs.

"The enormous number and unnecessary complexity of tariffs prevent consumers making easy comparisons and hinder switching.

"The Energy and Climate Change Select Committee will return to this issue if no action is taken."

An Ofgem spokesman said: "We welcome the research that Which? has done.

"We are already proposing radical action to cut down the number of complex and confusing tariffs following our investigation into the energy retail market.

"There are currently around 400 tariffs available and we are proposing new rules which will pare down the number of standard tariffs suppliers can offer, making it much easier for customers to pick out cheaper energy deals."

PA