MSE News: The easy way to navigate the energy market maze

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  • KimYeovil
    KimYeovil Posts: 6,156
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    Poosmate wrote: »
    It's not irrelevant nonsense. I would love to know how many people would be able to continue all of their obligations in full if they were to turn up for work on Monday only to find the doors locked and hear on the news that their company had gone bust.

    Irrelevant nonsense. You are ignoring the core point that on a direct debit tariff you pay in advance not in arrears. If you do turn up on such a Monday then you can sigh with relief because you have several months leeway with your fuel bills to adjust your belt.
  • Poosmate
    Poosmate Posts: 3,126 Forumite
    oakhouse13 wrote: »
    Over the coming 12 months, there's a chance some people who took out this tariff will not have the money to pay their direct debit through no fault of their own. They will then loose the £110, possibly be charged by their bank, will be put onto a standard tariff while people ike me will receive the discount and a lower than average tariff when I am not most in need.


    You can't really use this as an argument especially at this time of recession. No-one in our family thought my older brother would be made redundant earlier this year, if anything my younger brother's job looked a bit iffy and so was mine.

    And it doesn't just need to be the loss of a job that would cause one to not be able to meet all their obligations. There's always death, injury, illness, break up of relationship etc. to throw into the mix too. Are you saying then that you shouldn't take the cheapest option now just in case something happens in the future?

    Kim, (Sorry I can't do multiple quotes :()

    "Irrelevant nonsense. You are ignoring the core point that on a direct debit tariff you pay in advance not in arrears. If you do turn up on such a Monday then you can sigh with relief because you have several months leeway with your fuel bills to adjust your belt."


    This is somewhat true but you tend only to make a reserve pot during the summer months which gets swallowed up during the winter months so if the worst happens during the middle to end of winter you could end up struggling to meet the DD set. There is always too, that your DD payments are set too low and you haven't built up as much (if any) credit during the summer months (this happened to me once - it'll never happen again).

    Poo
    One of Mike's Mob, Street Found Money £1.66, Non Sealed Pot (5p,2p,1p)£6.82? (£0 banked), Online Opinions 5/50pts, Piggy points 15, Ipsos 3930pts (£25+), Valued Opinions £12.85, MutualPoints 1786, Slicethepie £0.12, Toluna 7870pts, DFD Computer says NO!
  • I am not that skilled at explaining my point, also because it is too complicated it is difficult for people to grasp, which is sort of my point.

    The tariffs are far too complicated. I don't think people have understood that a tariff is displayed at the top of the table showing an estimate of - for example - £700 for 12 months energy. This has had £110 taken off so in fact you pay £810 and only after 12 months are refunded £110.

    nPower and Scottish Power will know the percentage of customers who through no fault of their own at some point during that 12 months do not make it. They do not have to pay out £110 to these customers, and can put them on a higher tariff.

    When I return to the tables now, and these tariffs are no longer current, the tables show my annual expenditure on my current tariff as £810 i.e. they put the £110 in to make it more likely they can switch me again by showing a lower tariff.
  • Plushchris
    Plushchris Posts: 3,592 Forumite
    oakhouse13 wrote: »
    My tariff - nPower Go Fix 2

    £110 discount for direct debit payment paid 12 months after taking out the tariff. Free to leave Easterish time or pay a £20 per fuel penalty to switch before.

    At the time I took this out I looked at how other tariffs were structured. Some offered a huge discount for direct debit payment - twice what Sainsburys offered for example. You pay for twelve months and only then are refunded in effect your discount, it is not paid monthly.

    In the tables and I would imagine all comparison sites do the same, the tariff was shown with the £110 taken out - so it was at the top of the table along with other tariffs using the same technique.

    Over the coming 12 months, there's a chance some people who took out this tariff will not have the money to pay their direct debit through no fault of their own. They will then loose the £110, possibly be charged by their bank, will be put onto a standard tariff while people ike me will receive the discount and a lower than average tariff when I am not most in need.

    Ok, not sure what website you were using or when you celebrate easter but the exit fees on your tariff run until the end of July next year..
    And I've just run a comparison and looked at the go fix 2 tariff, you said in your first post that comparison sites dont include the discount when you look to compare against it, the one I just used did.

    Also, the discounts are £105 ;)

    How do you explain this..

    Last time I switched I switched to Ovo, they have no discounts whatsoever and appeared above Npower in comparisons I did at the time. How did they manage that when you say the websites are pulling a fast one by including a direct debit discount?

    Another thing, if you miss a DD payment with Npower you may well lose the DD discount (which is fair enough in my book) but you do not get put onto the standard tariff just for missing one DD
    Missing Tesco R&R since Feb '07 :A & now a "Tesco veteran" apparently! ;)
  • KimYeovil
    KimYeovil Posts: 6,156
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    I am not a fan of annual discounts. I am not a fan of cashbacks*. And, yes, you may argue the comparison sites should list more clearly where discounts are applied. But it is far more sensible to educate the public and expect them to know what to look out for.

    The central concepts are not difficult - an annual discount versus a monthly/quarterly discount; a pro rata discount versus a fixed discount versus a pro rata capped discount; a two-tier tariff versus a daily standing charge tariff.

    And you have missed out the most important and far more frequent reason that makes an annual discount a risky idea - these are not fixed tariffs. Far more people will be affected by a change in tariff price rather than the negligent few who have chosen not to budget cautiously in these turbulent times. Everyone taking out such a tariff knows it is a gamble.


    * even though I receive my gas and electricity for free as a result of the obscene practice.
  • I knew that's what you would do, Plushchris.

    From the screen grab taken at the time:

    Discounts: Direct debit discount of £52.50 per year for gas and £42 for electricity. Dual fuel discount of £10.50 per year. Total discount of £105 per year.

    If your point is £5 in my recall of a discount, I don't think you have a point. I am writing to make a much broader point about lack of transparency in prices leading to price discrimination in a life saving resource.

    Tariff: The savings quoted include any discounts associated with the tariff. The discounts will be paid to you annually in arrearrs from your final bill of each 12-month period. To qualify, you must take your supply from npower and pay by the same method for a full 12 month period - this period does not have to be Jan - Dec calendar year. Prices for this tariff are fixed until 31st July 2011. There is a £40 (£20 for gas and £20 for electricity) cancellation penalty if you leave this tariff before the contract end date of 31/07/11.

    npower told me different as to what happens if you can't meet a direct debit payment. I will call them tomorrow to double check. I don't think your version is correct but that's not what we are discussing.

    Someone on this tariff which is no longer current - if they enter their tairff and usage today in a comparison table, you say the £105 is taken off what they are shown in their current expenditure - why, the table does not know if you will be paid the discount in fact if you are switching now you will not be paid the £105 so why take it off?

    This is all proving my point.
  • Plushchris
    Plushchris Posts: 3,592 Forumite
    I'm only recalling from first hand experience of when I was with Npower on one of their earlier Signonline tariffs, I missed a payment right near the start of the 12 months (my own fault admitedly) I did not get taken off the signonline tariff, and I got my discount after 12 months of (consecutive) DD payments.

    Surely it disproves the point you made in your first post when you said..
    oakhouse13 wrote: »

    Now the tariff I signed up for is no longer current, when I do a comparison on a Consumer Focus comparison table, I am shown my annual spend without the direct debit discount taken off so by showing what I am paying inflated they can suggest I switch again and earn another commission.

    If you want transparent prices, vote with your feet and give Ovo a try...
    Missing Tesco R&R since Feb '07 :A & now a "Tesco veteran" apparently! ;)
  • Cardew
    Cardew Posts: 29,036
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    oakhouse13 wrote: »
    The solution I am proposing is much simpler, transparent prices that are no so complicated almost all consumers either do not have the time or are not mathematically minded enough to understand so they have to rely on a complex financial calculation deon by a comparison site that has a vested interest.

    This would bring far more consumers into the marketplace, far more than at the moment because I believe that most people are like me and do not trust a salesman whether that sales person is a comparison table or an introductory offer or knocking on your door.

    Lewis makes money from information by chance when that information results in a sale. He is not a salesman. I admit, I am very biased against sales & marketing and I would guess you both work in sales. When I read that £90 was on offer for referring just five consumers to switch and old people economise on fuel because it is too expensive, I object and want to change that.

    Not sure who you think work in sales? As far as I am aware it doesn't apply to anyone contributing to this thread - certainly not myself.

    Again, I really think you are missing the point here. You are again stating the obvious - that gas and electricity tariffs are far too complex and they have taken a leaf from mobile phone company's 'confusion marketing' tactics.

    That is a result of allowing competition in the market. The product is they sell is exactly the same gas and same electricity delivered by the same means. So they use 'smoke and mirrors' to present their services in the best light.

    One company(who cannot be named) have just about the most expensive gas and electricity in UK. To achieve this they have over 30,000 part time salesmen peddling their goods and obviously manage to convince customers their product is worth buying.

    So whilst we all agree that tariffs are too complicated, just saying "The solution I am proposing is much simpler, transparent prices that are no so complicated" is not a proposal, it is an aim! How do you propose to achieve that aim?

    It is rather like saying 'I propose to abolish disease and poverty and get Spurs to win the premier league'.;)

    I dislike comparison websites, for the reasons stated above,(they are parasitic) however whilst we have such complicated tariffs, they are the only way to quickly determine the cheapest tariff and the conditions attached to each tariff.

    Whilst they obviously have a vested interest in 'churn'(encouraging people to switch) they are regulated and provided you input the correct data, you get the correct results.
  • Plushchris
    Plushchris Posts: 3,592 Forumite
    I dont work in sales either, although have to admit it does facinate me..

    I guess its just a case of damned if they do, damned if they dont as far as the discounts are concerned, your first post in the thread complains about them not including the discount, then you complain that they DO include the discount, what are they supposed to do?

    Remember, its not the comparison sites that structure the tariffs, its the energy companies, as Cardew says, the comparison sites are regulated to give accurate results. I would have thought that regulation covers what they include and exclude as far as discounts are concerned.

    As I said earlier, the sites dont include prompt payment discounts when you pay quarterly by cash/cheque. Would you prefer these discounts to be included in saving figures?

    I can imagine the comparison sites would like to include them in their savings figures (especially for Scottish power as its quite a big discount) but they dont, can you explain why?

    And like I said, if clarity of billing and tariff is what you want, you basically have a choice of Ovo or Ebico. I switched to Ovo in July and have to say I'm really impressed so far, the bills are really well laid out and easy to understand and there are no stupidly complicated discounts. (have you seen the way BG discounts are applied lately?)


    Also, if comparison sites were abolished tomorrow, would we all see lower bills as a result?

    My guess is no, we wouldnt, the suppliers would just spend that money elsewhere on other advertising or incentive schemes..
    Missing Tesco R&R since Feb '07 :A & now a "Tesco veteran" apparently! ;)
  • My posts are not a complaint about my tariff. They are a complaint that showing a tariff minus an artificially inflated discount (called a discount for paying direct debit) makes it easier to sell a switch as you can show a big saving for switching. Not all customers switching will actually save because not all customers will make it through the 12 month contract necessary to be paid the discount. The ones who do not make it will be the ones least able to pay so my saving will be financed by the least well off paying more.

    If that customer considers switching, showing the tariff with the inflated discount makes it easier to sell another switch although it is not really comparing what the customer's current expenditure is since if they continue with their current supplier they will qualify for the discount.

    If discounts for direct debit had to reflect the true saving from offering that payment method, that would stop them being artificially inflated for marketing. Comparison businesses will side with the energy companies for why tariffs need to be complex because if they were transparent and if consumers had a general understanding of prices and could shop around for themselves, we would not need comparison sites and far more consumers would engage if they were confident about understanding the price.
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