Posts Tagged ‘energy’
The cheapest energy deals can’t be found on suppliers’ websites. Nor on comparison site tables. Despite falling energy prices, the best energy deals are actually being reserved for groupon-style collective switching deals. Power to the people.
Fixed energy tariffs are standing at a ten year low and have dropped below £900 a year –the cheapest deal on the market currently being £899 from GB Energy Supply for an average family usage. However, there are cheaper deals available by signing up to one of the growing number of collective switching programmes, where, a bit like price-drop TV, energy companies compete to offer the lowest tariff to a defined group of committed switchers.
An £876 tariff offer by the Telegraph (newpaper) has just sold out, snapped up by 8,000 people, and today, online comparison service uSwitch has offered a matching tariff with E.On which is available for group switchers until May 23.
The idea is, of course, that the energy companies benefit by instantly getting thousands of new customers without having to woo potential switchers with pricey advertising campaigns. And they’re still making money, as these cheapest deals are actually £419 cheaper than the average energy bill owing to the fact that three quarters of customers are on standard tariffs.
But how likely is it that the lowest collective tariffs are pinching at the profits of the energy giants anyway? Global crude oil prices are less than half what they were in mid-2014 prices, but energy bills are still flying relatively high, resulting in a Government investigation in January into why energy bills were not falling despite a drop in wholesale costs.
The “big six” energy firms claim they buy wholesale gas and oil months in advance, so absolutely totally cannot pass these savings on to consumers straightaway. And we all remember how they didn’t pass on any earlier increases in the wholesale costs as well…
There has been some movement, even in standard tariffs, with “token” price cuts that reduced annual bills by around £35 a year. However, research by our friends over at Which!!!, used hedging models to allow for such short- and long-term forward planning, and they think there is still scope for lower prices, suggesting that gas costs could drop by at least 8.8% and that a standard electricity tariff could fall by 10%
So if you’re looking to switch your energy bills, keep your eye out for a collective bandwagon upon which to jump, and if your fix is finishing soon, watch out for, possibly, even lower prices on the horizon.
Switching energy bills is supposed to be getting easier for consumers, so they can get the best deals, but it is clear that this isn’t the case as confusing tariffs and poorly presented billing information is stopping too many people from getting a package that is right for them.
So says a report by the CentreForum think-tank, compiled for comparethemarket.com. Of course, a lot of price comparison sites aren’t helping either, as they’ve been helping themselves, rather than you.
Despite Ofgem’s efforts, switching rates in the UK have been on the decline because the whole process is just too complicated. The report shows that the biggest problem for energy customers is the “deliberately confusing way that suppliers present information”.
Bills are presented in a way that is too complex and tariff descriptions were “buried in cryptic terminology, making like-for-like comparisons extremely difficult”.
The report invented a new word, saying that this ”confusopoly” is preventing fair and effective competition in the energy market, which of course, is leading everyone into being “ripped off”.
CentreForum think that Ofgem’s new Tariff Comparison Rate (TCR) should be given the chop or, at least, better communicated, because it could be “misinterpreted as an accurate comparison tool for all consumers” rather than the average customer. They’d also like to see a standardised Tariff Information Label, all put on one singular page, to allow people to make faster, better informed choices about their supplier.
The report’s author and associate director for economic policy at CentreForum, Tom Papworth, said: “The obfuscatory way that information is presented by energy companies acts as a significant barrier to switching supplier. Customers frequently complain about receiving too much information and having too much choice, rather than too little. Bills are complex and like-for-like comparisons difficult.”
“An overhaul of some of Ofgem’s Retail Market Review recommendations as we suggest would therefore clearly benefit consumers.”
Comparethemarket head of energy James Padmore said: “The report underlines the fact that the energy market is broken. Consumers struggle to make sense of energy bills and too many remain on uncompetitive tariffs because they are unsure of how to compare deals based on their current usage and expenditure.”
“We estimate that if everyone moved to the best energy tariff for them, the ‘energy dividend’ back into the pockets of UK consumers would be in the region of £4 billion – an indication of the overpayments caused by automatically rolling on to standard tariffs and not reviewing bills. Consumers need to be able to compare tariffs like for like and make informed decisions about the best deal for them. The report we have commissioned clearly shows that, at present, the energy industry falls woefully short of this requirement.”
This is the fourth largest payment made to Ofgem, who will be passing the money on to Citizens Advice. Eon have already coughed-up £400,000 to affected customers.
So what happened? Well, under Ofgem’s rules, suppliers have to give customers 30 days’ notice of price increases, so that they can switch to another provider before the rises come into play. Exit fees and higher tariffs should not be levied if consumers have said that they’re going to leave for another company.
These errors from Eon relate to their price hikes in January 2013 and January 2014. They’ve paid back an average of £8 and £12 to around 40,000 customers already, but that’s not good enough. Of course, Eon have already been fined £12m for violating sales rules.
Sarah Harrison, Ofgem’s senior partner in charge of enforcement, said it was “vital that suppliers play by the rules so customers are encouraged to engage in the market.”
“It is important that Eon has repaid potentially affected customers and co-operated with the investigation,” she added; “However, it’s absolutely unacceptable that Eon failed to provide these vital customer protections yet again and this persistent failure is the reason for the high penalty.”
The next government, whoever that might be, need to commit to energy efficiency, and not muck about by being weak wristed, like we’ve seen thus far, in a bid to stop UK homes from losing money, needlessly.
That’s according to a new Which!!! report, which says that the UK’s housing stock continues to be among Europe’s least energy-efficient thanks to poor insulation. In ‘A Local Approach to Energy Efficiency’, the watchdog says that Government figures from December show (up to) 5.4 million homes still don’t have their cavities filled and up to 7.4 million still need their lofts sorted out.
On top of this, Age UK reckon that the NHS spends £1.36 billion every year on treating illnesses caused by – and made worse by – cold houses.
Which!!! would like to see the country adopting a long-term approach, which would be funded in part by a levy on energy suppliers, and then put into a pot where funds can be allocated to local authorities. The report also calls for an overhaul of the Green Deal, after it transpired that only 399 plans had been taken on (on average) per month since the launch of the project.
Bigwig at Which!!!, Richard Lloyd, said: “With millions of homes still not insulated, energy efficiency is a collective failure of successive governments. The next Government must grab this issue by the scruff of the neck and commit to an aggressive energy efficiency strategy as soon as it takes power.”
“We want to see radical improvements to the roll out, funding and take-up of energy efficiency measures so people can enjoy warmer homes, lower bills and better health.”
Ed Miliband – a man who looks like someone stuck a nose on an uncooked gammon steak – is pledging to make our energy bills drop and he wants to give Ofgem more power to railroad energy companies. It is thought that this will be worth £100 to each household.
The leader of the opposition has already vowed to introduce an energy bill price cap, which will freeze bills until 2017. Labour reckons this will cut annual bills by £120, but with this new proposal, savings would be nearly double. Big talk.
Of course, this is all dependent on Labour winning the general election and, seeing as that doesn’t seem likely, Miliband may as well promise a robot sex maid for every house in the universe. On the chance that Labour do win, they will give Ofgem new legal duties to review energy prices and the power to order reductions in price if they find energy companies aren’t passing on savings.
Labour have promised that this will be fast-tracked so end overcharging by The Big Six. Of course, the energy companies have just dropped their prices, which makes all this chat lack the impact it would have last year.
It has been reported that Miliband is going to say: “What better evidence do we need of the chronic overcharging, the broken market and the ripoffs being faced by millions of families and businesses across Britain?”
“The vital link between the wealth of our nation and working families has been broken. It’s been 18 months since I announced the next Labour government would freeze energy bills – so they can only go down and not up – until 2017 while we reset this broken market. In those months we first heard loud protests from the big six energy firms and their PR guys in the government. Then we saw prices continue to rocket upwards, unchecked by the government.”
“Now something else is happening. The costs of energy are tumbling down, not because of anything the government or the big six energy firms have done, but because of global changes in oil and gas supply. The cost of energy to the big six firms fell by 20%. Your gas bill fell by between 1 and 5%. Your electricity bill probably hasn’t fallen at all.”
“Even the PR guys for the big six – David Cameron and George Osborne – admit this is a problem. But they have not acted and the whole country knows why. It’s because they will never stand up to powerful interests and they never stand up for you.”
It is a popular topic though, with chancellor George Osborne promising to watch The Big Six “like a hawk”, and no-one cares about what the LibDems think.
Scottish Power have been slapped with a sales ban after they failed to meet Ofgem’s customer service targets. The energy provider was told to clear all their outstanding Energy Ombudsman decisions regarding customer complaints, but they didn’t.
They were asked to answer customers’ calls more quickly, reduce a backlog of bills and sort out outstanding ombudsman rulings. As such, the 12-day sales ban means the company can’t engage in “proactive sales” from today.
The energy company said that they are “committed to delivering the best service possible and treating our customers fairly”.
Sarah Harrison, Ofgem’s senior partner in charge of enforcement, said: “A sales ban illustrates the difficulties Scottish Power is having in delivering the levels of service customers deserve. While Ofgem’s targets have driven significant improvements in Scottish Power’s performance, we remain very concerned about how customers are being treated.”
Scottish Power say: ”We have successfully delivered two of the targets. In relation to the target of having zero ombudsman remedies over 28 days, we cleared 2,575 cases during November and, at 1 December, the Ombudsman confirmed that we have achieved the zero target.”
“However, subsequently it was identified that 30 cases had been closed incorrectly. We sincerely apologise to these customers for these errors. The cases were immediately fixed on discovery. In line with our original voluntary commitment and with the agreement of Ofgem, we will now stop outbound selling from 4 March until 15 March.”
Sometimes, businesses are so bad it is almost literally beyond belief, and smaller energy supplier Spark Energy has now been fined by Ofgem for falling squarely in that category. The crime? On top of sky-high charges and inaccurate billing systems, Spark Energy simply ignored customers’ requests to leave the supplier and just continued to bill them. Astounding.
An Ofgem investigation found that up to 29,000 households were left facing “eye-watering” inaccurately high bills and “staggeringly bad” customer service and that customers were “prevented” from leaving over a three year period between June 2010 and May 2013.
Many of Spark’s customers were tenants in rented accommodation who were signed up automatically by letting agents, and who then found themselves facing the highest pay-monthly tariff on the market. Ofgem’s £250,000 fine also took accounts of billing technologies that were “not reliable and generated inaccurate bills”, and yet, a bit like Hotel California, guests at Spark Energy could never leave.
Or could they. It gets even better as it appears some select few customers were permitted to escape Spark’s clutches- but only if they were a customer Spark didn’t want, and then they were switched against their will and without their knowledge. Ofgem documents suggest that only 705 customers were able to leave the supplier. These were customers in debt and between August 2011 and May 2013 Spark used switching websites itself and signed these customers up for different suppliers without their knowledge.
“Customers would not know the transfer had been completed or the identity of the new supplier until they received a welcome letter or email from the new supplier,” Ofgem said.
And if all that weren’t enough, Spark also failed to return cash to customers who were in credit in good time and didn’t deal with complaints properly. The company has agreed to pay £250,000 to Citizens Advice in lieu of a larger financial penalty after admitting to breaching a string of regulations.
Ofgem said: “From June 2010 to May 2013, Spark blanket objected to consumers switching their supply contract to another provider. As a result, consumers were unable to… choose a cheaper supplier (which would have been possible for pay monthly customers as Spark was the most expensive supplier during the period).”
“It is clear from the complaints evidence that some customers found their experience with Spark at the time extremely frustrating,” Ofgem finished in a totally obvious statement.
A spokesman for Spark Energy said, inadequately: “We welcome the manner in which Ofgem has dealt with these issues. We’ve learned valuable lessons from this process and recognise there were things we should have done differently, and we apologise for these failings.”
He went on: “However we’re pleased Ofgem has recognised the progress we’ve made over the past 21 months to transform our levels of customer service in this complex and difficult market.” We’re just surprised they have any customers left- unless they have all tried unsuccessfully to leave too…
The regulator is coming under fire from the Commons Energy and Climate Change Committee and, even though there’s been falls in bill prices and new price caps, MPs aren’t impressed.
The trouble is that new rules from the regulator aren’t tough enough and that those that manage the pipes and wires that dole out gas and electricity are still raking it in and not passing enough savings on to the customers.
Committee chairman Tim Yeo says: “Ofgem’s chief executive told us that we would have to wait eight years to see whether value for money was being delivered for bill payers. This is too long for hard-pressed consumers to wait. Ofgem must get its act together and scrutinise these near monopolies more effectively. Simpler charging methodologies are needed to strengthen the market’s ability to scrutinise costs and increase the pressure for greater cost-saving efficiencies.”
“Barriers preventing smaller players from entering the market must be removed to drive down costs for consumers.”
Energy companies pay network costs to use the aforementioned pipes and wires for distribution and transmission purposes and they are applied to bills. These costs amount to, roughly, 23% of a gas and electricity dual fuel bill. To sort this out, Ofgem introduced the RIIO system, designed to control network costs.
However, the committee have said that there’s ‘clear evidence’ that the network companies were coining it in far more than expected. The committee said that “this suggests that the targets and incentives set by Ofgem are too low, barriers to market entry are high and that Ofgem needs to monitor RIIO more effectively and to equip RIIO with stronger, corrective measures.”
“While we recognise that the new RIIO framework is an improvement on its predecessor, Ofgem has not yet created the conditions for the market to thrive and provide consumers with best value for money.”
So what’s the solution? Well, MPs would like to see a thorough study into replacing this system that is simpler and national, as the current one has a variety of regional charges and codes which make it more difficult to compare prices across networks. The committee would like Ofgem, and the Government, to start taking this seriously.
Of course, only last week, the Competition and Markets Authority said that they think we’re all being overcharged to the tune of £234 a year for our gas and electricity.
The owner of British Gas, Centrica, have said that they’ve had a big fall in profits thanks to nice weather and the drop in oil prices. Seeing as they stuck our bills up, seemingly needlessly for so long, it’d be funny if they expected anyone to feel sorry for them.
Centrica’s full-year operating profits fell by 35% to £1.75bn, which means that British Gas profits from residential business fell by 23% to £439m. Isn’t it awful when you’re still making a profit, but not as much as you normally do?.
Giving everyone the doe-eyes, Centrica said the price of oil and gas had forced them to write off £1.4bn from their balance sheet and that they were going to have to put off capital investment in the North Sea. They added: ”Other companies are doing the same thing. It’s difficult, but it is what we have to do to position the company sustainably.”
Oh, BOO HOO.
On Radio 4, Centrica honcho Iain Conn, said that “2014 was not the year we had planned it to be”, adding that his company continued “to face a number of challenges as we enter 2015, particularly the significant further reductions in wholesale oil and gas prices since the middle of December”.
Quick reminder. The company still have £1.75bn in profit, so when they’re complaining about people’s bills being £10 lower than they were 2014, like it’s our fault, don’t feel too bad. It seems, as a nation, we don’t, as for the last couple of years, British Gas have been losing a lot of customers, with 368,000 leaving them in 2014. The reason customers left? British Gas whacking everyone’s bills up.
So there you have it. British Gas’ owners want you to feel bad for them. If you want to kick them while they’re ‘down’, then here’s how to switch your energy account and get with a company that’s less emo.
A couple of days ago, we pointed out that there’s a lot of people losing money because The Big Six energy companies are ripping you off. Well, according to the Competition and Markets Authority, over 95% of households in the UK are indeed paying too much.
They’ve said that everyone could save £234 a year by switching their supply of gas and electricity.
As ever, the ones being hammered hardest are the poor and old, because they either think switching is impossible, or that it’ll be too difficult to do or they haven’t even considered it at all. With the Big Six charging the highest prices and not likely to help you out, then people are being stung via their ‘standard tariffs’.
The watchdog is going to continue to look into this in a bid to find out why people don’t shop around and whether or not the Big Sixers are actively trying to keep everyone “disengaged so as to retain them on high tariffs”.
The CMA are also looking at the possibility that the energy companies are ‘discriminating’ against loyal customers (or indeed, those disengaged) and weighing-up whether the businesses might “exploit and influence” the behaviour of their customers to their own advantage.
With more than 90% of UK households signed-up with the Big Six firms – British Gas, SSE, ScottishPower, E.On, EDF Energy and Npower – this is of course, a big problem. Many customers are with this shower after companies inherited them after the energy market was privatised over a decade ago.
How To Switch
If you want to switch accounts, then you can use an Ofgem-approved price comparison site. Find out about those by starting here. Before doing that, get in touch with your current supplier and ask for an ‘annual summary’, so you’ll have all the info you’ll need to get a better deal. You can also call the Energy Saving Advice Service on 0300 123 1234.
The Big Six energy companies are a pain in everyone’s backside, despite the fact they’ve lowered everyone’s bills by a small amount.
However, there’s more they could do, as it looks like somewhere in advance of 13 million homes are losing £200 per year because they’re on variable rate energy tariffs. That’s billions per year, when you tot it up.
With these deals, people are paying out more than they need to. If they switched to a fixed rate deal or changed to a smaller energy company, you could be saving as much as £250 per year.
These figures are coming to light as the inquiry by the Competition and Markets Authority (CMA) continues, due to be published soon. It won’t surprise a soul when we all find out that the Big Six are continually not passing on savings to their customers.
This estimate comes from the Department of Energy and Climate Change, which is being referred to as the £2.7billion rip-off. Today, they’re launching the ’Power to Switch’ campaign, in a bid to get people to move away from tariffs that are needlessly expensive.
Of course, one of the simplest ways of switching is to use a price comparison site (preferably one that has been approved by Ofgem) and you can be saving money with half a dozen clicks. Before you do that though, you’ll need your ’annual summary’, which you can request from your energy supplier.
That means, when you go to the comparison site, you’ll have all the correct information about things like annual usage, your tariff and all that, so it can work out which new deal would be best for you and highlight the amount you could be saving. Or, if you prefer, you can phone the Energy Saving Advice Service on 0300 123 1234. If you’re doing it online, then start here.
The five biggest price comparison websites in the energy market are being accused of all manner of things lately. One of the things being levelled at them is that they’re sending callers to energy tariffs that earn them commission when they’re not the cheapest deal at all.
Looks like, if you ring up and ask for the cheapest deal, there’s a chance that you’ll be sent to the cheapest energy deal that gets the comparison site a commission, rather than the actual deal that is best for you.
If we were Harry Hill, we’d do a sideways look to camera right about now.
Website The Big Deal has released recordings of phone conversations and transcripts from the last month, which they claim that the five biggest comparison sites – Confused.com, uSwitch, Go Compare, Compare the Market and MoneySuperMarket - conveniently failed to tell callers that some deals about the deals that don’t pay them a commission.
So, with uSwitch for example, the price difference between the cheapest tariff and the one that they claimed was the cheapest deal (according to The Big Deal) was £60. uSwitch aren’t amused and said: “We have very strict guidelines in place for our call centre advisers to follow and these include informing customers of the cheapest deal available, whether we can switch them to it or not.”
“We are investigating this matter fully and will take disciplinary action with any individual found to have breached these guidelines.”
The Big Deal co-founder Will Hodson said their findings show that comparison sites are “behaving as badly over the phone as they are online”, adding that those who will be ringing comparison companies will be people who aren’t fans of the internet, like old people or those who can’t afford an internet connection. Vulnerable people, basically.
Of course, this follows The Big Deals findings that comparison sites were pulling a fast one online too. Ofgem are also looking into it all and have banned comparison sites from automatically showing a partial view of deals from suppliers paying commission to them, instead, they’ve now got to start showing all available deals on the market.
MoneySuperMarket spokesman Stephen Murray said: “We completely deny the allegation that we lied to the customer. The telephone operator stated at the start that there were products available which she couldn’t switch the customer to. However, having reviewed this call, in this instance we feel we could have made that clearer. We are reviewing what we say to customers to ensure this is always crystal clear in future.”
Compare the Market.com’s spokesmeerkat said: “This mystery shopping exercise merely demonstrates that price comparison websites provide a valuable and transparent service to consumers.”
“The shopper was shown the whole of market when he searched for tariffs online. When he then decided to call our customer helpline to switch through an adviser, it was made very clear that his current tariff was being compared to a wide range of tariffs currently available through comparethemarket.com. Therefore, all quotes he was given over the phone were tariffs available to him through comparethemarket.com rather than the whole of market.”
“This process is clear and easy to use. We refute all claims that we misled the caller or offered an uncompetitive tariff.”
Energy companies may well have dropped everyone’s bills, but they’re going to be making a profit thanks to lower wholesale gas prices. Basically, because they’ve not lowered our bills by as much as they’re saving on wholesale costs, their pre-tax profits over the next year will be up by around 50%, which is £114 profit per household.
Those figures come from energy regulator Ofgem, who are putting pressure on the Big Six to lower our bills even further. Not enough pressure to make them actually do it mind you. They’re basically nagging in the hope it’ll work in our favour.
“Pre-tax margins of a typical supplier are likely to widen over the next 12 months as wholesale costs continue to fall sharply even when accounting for recent price cut announcements,” they said. ”If the market were more competitive you would expect suppliers to be competing more vigorously for market share in response to falling wholesale costs.”
As previously reported on these pages, Big Six companies have announced their price drops, which land between 1.3% and 5.1% and, crunching the numbers, every knows that the energy providers could’ve offered much better deals for their customers.
Gillian Guy, chief executive of Citizens Advice, said: “The inadequacy of recent energy price cuts is now clear. Low wholesale costs are allowing energy companies to increase profits whilst barely cutting energy prices. The ball is now back in the energy firms’ court to actually compete with each other on further and deeper price cuts.”
The Treasury are already investigating the energy sector, to see whether or not the Big Six are actually passing on savings, which they’re clearly not. While one sector gives us small savings, another launches expensive investigations to state the bloody obvious with our taxes.
The company – one of the most complained about energy solution providers out there – have pushed the boat out and knocking a whopping 1.3% off.
That works out at approximately £9 a year, or 17p a week, based on the average gas users usage. Hardly worth bothering with, really. It’s almost as if they’re daring the customers to flee.
According to MoneySuperMarket’s Stephen Murray: “This is truly the most underwhelming of the lot. On top of that, we see that bill payers will again not feel the full benefit of lower bills immediately.”
The company defended their measly 1.3% price reduction claiming that the vast majority of gas EDF bought for its customers was purchased well in advance and at higher prices.
Beatrice Bigois, managing director of customers at EDF, said: “EDF Energy has a strong track record of acting independently in the interests of customers who have benefited from the best standard variable prices for the majority of the last three years, in comparison to other major suppliers. Today’s price cut means our standard tariffs will continue to be among the most competitive in the market. At the same time, one and a half million customers are benefiting from fixed price deals with no exit fees.”
On Monday SSE said it would lower gas prices by 4.1% but not until 30 April. On Friday, Npower announced it would reduce household gas prices by 5.1% from 16 February. They’re still somewhat higher than 1.3 bleedin’ %.
Anyway, EDF’s wondrous gesture kicks in from 11th February.
The company become the fifth of ‘The Big Six’ energy firms to have announced a reduction in their price cuts, following recent moves by the likes of E.On, British Gas, Scottish Power and Npower.
Now they’re all staring at EDF to follow suit.
SSE will cut domestic gas prices by 4.1% from 30th April, which should save their average households around £28 a year. Whoop. They’ll be mindful that they’ve got to win people over after it was revealed that Ofgem are investigating them.
SSE – who have around 8.7 million customers – have also said it would extend its guarantee not to increase its gas and electricity prices until July 2016, and that wholesale energy costs now make up “less than half of the typical household energy bill”.
Steve Forbes, SSE’s director of GB Domestic, said: “We were the only supplier to freeze prices and we promised we would cut them if we could; now we’re delivering on that promise with an average £28 reduction in gas bills.”
“There are significant other costs within energy bills, including those relating to government-sponsored environmental and social policies and the roll-out of smart meters.”
Chipping in, Alistair Phillips-Davies, SSE’s chief executive, said: “Customers are at the heart of SSE’s business, and our work to secure their energy supplies in wholesale markets last spring enabled us to guarantee that prices would not increase until at least January 2016, showing we are committed to treating all of our customers fairly and to giving them stable prices over the long-term.”
“We’re being true to that commitment with a 4.1% reduction in the typical gas bill and an extended guarantee meaning gas and electricity prices won’t go up before July 2016 at the earliest.
SSE reckon the prolonged period of mild weather to 31 December 2014 meant that average consumption of electricity was estimated to have fallen by 5.6% while average consumption of gas dropped by almost 16%.
This ongoing set of price tumbles is responding to politicians and general “stop charging so much” level headed humans as well as due to the reduction in oil and gas prices. For that reason, the energy industry is undergoing a full scale inquiry from the Competition and Markets Authority (CMA) into the way it operates. The CMA inquiry is expected to report its provisional findings in May or June.