Which? : Ofgem's energy plans could cost consumers £55m

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joncombe
joncombe Posts: 320 Forumite
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It seems Which? has come out against the plans by Ofgem for simpler energy tariffs. They have come out in favour of a single unit price (I presume with no standing charges) as the simplest way for consumers to compare prices. I think that is far more sensible than the current proposals of replacing two teir unit prices with one teir and a standing charge as this is really no simpler because you still can't compare the unit rate because you need to look at how high the standing charge is to work out if it would be a better deal.

http://www.which.co.uk/news/2013/04/ofgems-energy-plans-could-cost-consumers-55m-317489/
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  • sheffield_lad
    sheffield_lad Posts: 1,990 Forumite
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    It sounds sensible no standing charge a single rate but that for most medium/high users (and probably most of the population), would put the cost up. Wouldn't it?

    The other big losers would of course be price comparison websites who spend millions on advertising (£32million last year), to convince us to switch.
  • Cardew
    Cardew Posts: 29,037 Forumite
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    Even with a single price tariff, will they allow discounts for dual-fuel, payment method, etc etc?
  • Wywth
    Wywth Posts: 5,079 Forumite
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    Cardew wrote: »
    Even with a single price tariff, will they allow discounts for dual-fuel, payment method, etc etc?

    I don't think so. They suggest they would like to see gas & electricity priced similar to the way petrol is sold.

    i.e. I think they are proposing every supplier follows the Ebico model.

    I think if all suppliers did, the cumulative £55m oncost Which suggest the Ofgem rules will cost will pale into insignificance. ;)
  • Wywth
    Wywth Posts: 5,079 Forumite
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    sheffield_lad wrote: »
    It sounds sensible no standing charge a single rate but that for most medium/high users (and probably most of the population), would put the cost up. Wouldn't it?

    The other big losers would of course be price comparison websites who spend millions on advertising (£32million last year), to convince us to switch.

    So the suppliers will look towards other outlets to advertise why consumers should choose their particular company.

    You don't get much prime time TV advertising for £32m (about 50p per consumer per year)
  • spiro
    spiro Posts: 6,403 Forumite
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    Standing charge plus a single price for units has got to be simpler to compare. You multiply the SC by 365 in all cases and unit price by your consumption. You will never get to a single charge without SC otherwise every unit will cost more to ensure SCs are covered and large users will suffer.
    IT Consultant in the utilities industry specialising in the retail electricity market.

    4 Credit Card and 1 Loan PPI claims settled for £26k, 1 rejected (Opus).
  • Former_MSE_Darryl
    Former_MSE_Darryl Posts: 210 Forumite
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    "Which? wants to see energy firms introduce a single price for gas and electricity to make tariffs clearer and simpler for consumers...."
    Read the full story:

    Which? calls for single prices for energy bills

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    Click reply below to discuss. If you haven’t already, join the forum to reply. If you aren’t sure how it all works, read our New to Forum? Intro Guide.
  • ic
    ic Posts: 3,291 Forumite
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    spiro wrote: »
    Standing charge plus a single price for units has got to be simpler to compare. You multiply the SC by 365 in all cases and unit price by your consumption. You will never get to a single charge without SC otherwise every unit will cost more to ensure SCs are covered and large users will suffer.

    Take a look at ebico - they've been doing it for years, but as you say are only good for low users.

    As said above, when there is a plethora of discounts available then they'll still be difficult to compare. Whats to stop a supplier discounting when your bill goes over £x in a month or year (i.e. bring back two tiers in everything but name)?
  • wakeupalarm
    wakeupalarm Posts: 1,102 Forumite
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    There are fixed cost to maintaining gas and electricity pipes and wires to homes. Moving to just a single rate would mean low users are subsidised by increasing costs to medium and higher users. Even with petrol everyone pays a fixed cost in terms of road tax, owning a car, annual mot etc, regardless of how much petrol is used.

    IIRC there was a proposal for there to be a single rate standing charge set by Ofgem for every energy company. This would have had the benefit of addressing the issue of everyone paying a contribution to the cost of maintaining pipes and wires to the home, and being able to compare unit rates between the energy companies as everyone would have paid the same standing charge and the only variable would have been the unit rate.

    This was rejected by the energy companies as they argued they all had different fixed costs.

    There is no simple solution as the current structure of the energy market is broken and not working. These measures are simply putting a band aid on a corpse.
  • MillicentBystander
    MillicentBystander Posts: 3,518 Forumite
    edited 23 April 2013 at 11:58AM
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    I'm sure there also fixed costs in maintaining the roads in the UK but that doesn't mean everyone with a car pays the same standing charge (road tax). Imo it's a poor argument for having a standing charge for everyone. A single rate/no standing charge for everyone is surely the only really fair way of doing this? You use more you contribute more. Simples. The problem is there is now a huge, thriving and parasitic industry specifically set up (and profiting massively) as a result of the ridiculously (and wholly avoidable) complex nature of the energy industry.
  • Cardew
    Cardew Posts: 29,037 Forumite
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    Originally Posted by Cardewviewpost.gif


    Even with a single price tariff, will they
    allow discounts for dual-fuel, payment method, etc etc?
    Wywth wrote: »
    I don't think so. They suggest they would like to see gas & electricity priced similar to the way petrol is sold.


    I have a '5p a litre off' coupon. Some places give Nectar points etc

    I suspect lots of people will not pay by Direct Debit if quarterly billing in arrears costs the same, i.e. no DD discount.

    For all companies Direct Debit discounts are given as it is a much cheaper and simpler way to administer an account. By not allowing companies to reward payment by DD it will add to the overall cost.

    Similarly if there is no dual fuel tariff or discount, people will probably use different suppliers for gas and electricity; again increased costs.
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