New ‘simplified’ billing system not enough to help consumers, says Energy Advice Line
Changes designed to make energy bills simpler to understand were not enough to help consumers compare business electricity rates easily, according to the Energy Advice Line. A ban on confusing and complex tariffs, which came into effect on January 1st, was welcome but consumers would still struggle to identify the cheapest deals, according to managing director of the service Julian Morgan.
“OFGEM has moved to streamline a completely baffling system by limiting suppliers to just four core tariffs per customer for both electricity and gas,” Mr Morgan said.
“This is certainly a step in the right direction but consumers will still be scratching their heads when they look at their bills and try to compare the price they are paying with the tariffs offered by other suppliers. That’s because suppliers still use different methods to set their tariffs, and some include standing charges while others don’t, so it’s often like comparing apples and oranges. The other problem is that some consumers will miss out on good deals as a result of suppliers scrapping value tariffs in order to fall in line with the reforms.”
A Tariff Comparison Rate (TCR) will be introduced in April, along with other changes designed to allow customers to easily compare tariff rates. But Mr Morgan said the TCR system was based on average energy use, not the actual energy used by individual consumers, and therefore was inaccurate.
“What’s more, some consumers who use less than average levels of energy could end up paying more because the rates they will be using to compare prices will be based on a higher usage,” Mr Morgan said. “The government, OFGEM and energy suppliers need to put their heads together to devise an at-a-glance system so that consumers can compare what they’re actually paying against what they actually would be paying if they switched suppliers. It’s the only way to enable consumers to make accurate prices comparisons.”
Mr Morgan said monitoring the market and switching suppliers remained the best way to keep energy bills as low as possible, despite the fact that all the major suppliers appeared to be increasing their prices by similar amounts. “Not all suppliers are the same and it’s a volatile market so it still makes good financial sense to shop around and switch suppliers when you find a cheaper deal.”