Can you work out your energy bill? You’re cleverer than an accountant then.
Now that EVERYONE has put up their prices for electricity and gas, being able to work out whether your current energy provider is shafting you has become a necessary, rather than merely desireable skill. However, our good friends over at Which! have done some serious in-depth research into how easy energy bills are to understand. And the conclusion is Not Very.
Which! had a spare five minutes, so asked 36 whole people, including a solicitor, an engineer and an accountant, to work out their domestic energy bill using nothing but information from the supplier's website, just one - a company director - could do it. The accountant they asked was not me. I am eminently capable of reading my own bill.
Which!’s concern is that making bills so complex conceals bad deals from customers, with comparisons being made particularly difficult by the ‘tricks’ that energy tariffs typically include. Amongst the most common tariff tricks are two-tiered tariffs which penalise lower users by charging a much higher rate for the first block of units, and 'discounts' that do not materialise because the customer leaves the provider before a set period.
As a result, Which! has called on Ofgem to introduce one simple standard format for all tariffs, which would have a daily charge covering fixed costs and a unit rate covering the actual energy used.
Richard Lloyd, Which! executive director said "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."
Separate research from Energyhelpline.com suggests the Government is set for a £197 million VAT windfall from the latest round of energy price rises. They estimate that the recent price rises will increase the annual VAT take from domestic energy will rise to £1.5 billion. Mark Todd, director of Energyhelpline.com has asked the Government to consider cutting the VAT rate on power from 5% to 4% in order to help out hard-pressed households.
"This will give an immediate £13 a year saving on a typical bill and, for once, the Government would actually be reducing people's bills instead of just talking about it," he snarled.
While a reduction of the reduced rate of VAT on fuel would undoubtedly be welcomed, are energy bills really that hard to understand? Is the concept of a two-tiered rate so difficult to grasp? A straw poll round the Bitterwallet office clearly didn’t help, as all the others have OTHER SKILLS rather than the searing intelligence and wit of yours truly, but surely the average Bitterwallet reader can manage? Can’t you?