EON Standard Plan is cheaper than Price Protection May 2012!

paul2345

Hi Malc / Helena,

Today I checked to see if I was on the cheapest plan @ confused.com and thought that I wasn't. So I switched from Eon Saveonline v2 to the newer version 4. Only afterwards did I realise that the 10% saving I thought I was getting, was actually a 10% loss.

As it's no longer sold I don't seem to be able to switch it back online, however I got your email as below...

"Please let us know within the next 14 days if you change your mind" ....
"if it’s an old version of a product it may not be available anymore and you’ll need to call us if you want to switch back."

Please can I be switched back to v2? I called the helpline but they woudln't/couldn't change it back.

At the very least, the automated email that is sent out needs changing if I can't be swapped back. (ps I've also emailed you the details)

Thanks,
Paul

Former_E.ON_Company_Representative:_Malc

Hi Paul

I've received your email and replied.

I'm sorry the agent you spoke with wasn't able to switch your tariff back to Saveonline 2.

Following a product switch, we do have a 14 day period to allow you to change your mind and I have sorted your account out accordingly.

Hope this is ok for you Paul and sorry again it wasn't sorted when you called in.

Malc

Former_E.ON_Company_Representative:_Malc

Hank_Marvin wrote: »

Hello Malc, Nor probs with you replying.
E-ON was 3rd behind British Gas Energy Smart & Southern Electric, on the fixed price/capped, if i've understood it correctly. It said for E-On the tariff best for my usage was E-ON Price protection May 2012 Duel Fuel, with a calculated price off £241. but couldn't work out was that price for both gas & electricity. My years usage is 250 kwh a year gas - 950 kwh a year electricity. Don't make it easy with this switching malarky do they lol!!

Hi Hank

Our Price Protection May 2012 product is available for both Dual Fuel and Electric only. It's not available as a Gas only tariff.

If you've inputted usage figures for both fuels, then I suspect you've been quoted for the dual fuel version.

Hope this answers your question Hank. Give me a shout if I can help further as will be happy to do so.

Malc

paul2345

Thanks Malc.

backfoot

E.ON_Company_Representative:_Malc wrote: »

Hi Hank

Price Protection May 2012 is a capped product which guarantees the unit prices will not be increased before May 2012.

However, it initially carries a 5.9 per cent premium above our current standard rates. Therefore, in the beginning, it will cost more than our standard product.

We have other tariffs available which are cheaper than both Price Protection May 2012 and our standard tariff, although these may have conditions attached which you consider unsuitable. More details are available on our website.

For the fullest picture, I would pop your annual usage in kWh on to one of the comparison sites. This will list out all the options open to you, both with us and the other suppliers.


Malc

In all fairness,the rep has pointed out that customer's should use comparison sites. :T

What I feel uncomfortable about is these Fixed Price Products. Eon's is described as capped but isn't the May 2012 offer essentially fixed?

By way of understanding, I compared my new deal with Eon's price protection 2012. It would be £357 dearer p.a. For me, that is 21% higher even before taking into account Bonusses or switching cashback.

Remember, we are only talking of a guarantee to May 2012.That's only 18 months away. Even after expected rises to come from Eon, EDF and Npower, later this year or early next, are we really likely to see that 21% differential eaten away?

Say EDF raise prices in March 2011 by 10%,(hopefully worst case scenario), there would still be an 11% premium to pay until the next rise.

I can't see for the life of me,why anyone would pay a massive premium for no probable downside risk.:eek:

Also one of the Conditions is that if you decide to terminate,they cancel any discounts on the final bill. Why? I thought it was a discount for payment method rather than exit penalty?

Does my analysis stack up?

Clever marketing or what?

Former_E.ON_Company_Representative:_Malc

backfoot wrote: »

In all fairness,the rep has pointed out that customer's should use comparison sites. :T

What I feel uncomfortable about is these Fixed Price Products. Eon's is described as capped but isn't the May 2012 offer essentially fixed?

By way of understanding, I compared my new deal with Eon's price protection 2012. It would be £357 dearer p.a. For me, that is 21% higher even before taking into account Bonusses or switching cashback.

Remember, we are only talking of a guarantee to May 2012.That's only 18 months away. Even after expected rises to come from Eon, EDF and Npower, later this year or early next, are we really likely to see that 21% differential eaten away?

Say EDF raise prices in March 2011 by 10%,(hopefully worst case scenario), there would still be an 11% premium to pay until the next rise.

I can't see for the life of me,why anyone would pay a massive premium for no probable downside risk.:eek:

Also one of the Conditions is that if you decide to terminate,they cancel any discounts on the final bill. Why? I thought it was a discount for payment method rather than exit penalty?

Does my analysis stack up?

Clever marketing or what?

Hi backfoot

Just thought I would try and clarify this point.

Price Protection May 2012 is a capped product, in that, the unit prices will not go up (above the level that applied when the customer renewed) during the capped price period.

However, prices will be decreased if our standard prices go down (below the level that applied when the customer renewed) during the capped price period.

I do understand this type of product is not suitable for everyone and there are many other cheaper tariffs out there, both with us and the other suppliers.

Price Protection May 2012 is more for people who want the peace of mind of knowing their prices will not change for a set period.

As you say, always best to check out the comparison sites for the fullest possible picture.

Hope this clears this up backfoot. Give me a shout if you need any more details as will be happy to help.

Malc

backfoot

E.ON_Company_Representative:_Malc wrote: »

Hi backfoot

I do understand this type of product is not suitable for everyone and there are many other cheaper tariffs out there, both with us and the other suppliers.

Price Protection May 2012 is more for people who want to peace of mind of knowing their prices will not change for a set period.

Malc

Thanks Malc,

I appreciate your clarification and for entering into the discussion. You will appreciate that any comments I make are not aimed at you personally.

It's disingenous to say that the product is for people wanting peace of mind against price changes. As set, it is so heavily weighted against the price level ever reaching the premium level of the 'fix', that it will actually cost the Customer considerably more.The combination of the timing, the short period of the protection and the size of the premium measured against online rates, make it a clear marketing ploy.

Unfortunately,the inference, and you have repeated it, that customer's are protected is just untrue.They would only be protected if there was an enormous rise in prices over the very short term.There aren't any indications to that extent.

It is very apparent that many customers are easily taken in by the concept of fixes because they are taken in by the apparent comfort that the wording implies.

It will be interesting to see if this is a genuine fair and economic fix after Eon's next Price Rise. I bet you a fiver,that the product is very quickly withdrawn at its current levels.

A genuine Fixed or Capped Product would have a reasonable current premium, the term would be not less than 3 years and probably more like 5 years. It would have some modest Exit Penalties.

This way, customers would have a genuine upside/downside risk over a longer period of time to hedge against uncertainty. At the same time the Energy company get a long term income stream.

Fair comment?

Pincher

Unlike the money markets, where it's easy to arrange a five year hedge, the energy market operates 18 months futures contracts,
so the utilities cannot do a five year fix by hedging. This is why you can get FixOnline products, which typically has a span of 14 months.

To provide a five year fix, the utilities are totally exposed for more than three years, so they have to set a high price to minimise their risk. There are theoretical synthetic hedges they could do, by buying oil company shares and things, but the management, transaction and holding costs themselves will add to the price.

Just grab a good deal when you see it. I love my FixOnline 8,
it's just a shame it has to end in on 1st July 2011.:(

backfoot

Pincher wrote: »

Just grab a good deal when you see it. I love my FixOnline 8,
it's just a shame it has to end in on 1st July 2011.:(

I take your points.

EDF have a 2015 product so they can use their intuition to set a fix over a decent term.I agree they will factor in a safety margin.

There have been decent deals in the past. You seem content with yours and I used one a couple of years ago,which was advantageous for a while.

The point I was making is that they currently don't seem at all competitive or even fair. Due to people's fears, it is easy to fall for the wording without realising the consequences. Indeed they currently look set to fleece the unsuspecting.

Former_E.ON_Company_Representative:_Malc

Don't worry backfoot, I don't take comments personally. Water off a duck's back and all that.

I think I understand where you're coming from in comparing your current deal with Price Protection May 2012.

Am I right in thinking you have an online tariff?

If this is the case, you will be receiving extra discount for managing your account online and paying with a Monthly Direct Debit. Therefore, I can see where such a large difference comes from when comparing your new deal with Price Protection May 2012. Clearly, the protected tariff is not for you.

However, not all our customers are comfortable with online management or Direct Debits. Therefore, we offer a range of products to try and accommodate the needs of people with different priorities.

Price Protection May 2012 is just one of a number of tariffs we offer with different sets of terms and conditions. Some of these are aimed more towards customers who prefer things like paper bills and payment on demand.

The May 2012 product was first released on 8 April 2010, giving two years of guaranteed prices for customers opting for the tariff at the outset. The prices are 5.9 per cent higher than our current standard rates.

Whether it turns out to be cheaper than standard rates over the long term depends on what happens to prices between now and the product end date. This bit's a gamble but some people like to offset this risk with the security of knowing they will not have a price rise over the next two winters.

I suppose it's horses for courses really. Whilst I fully appreciate your point about the tariff never 'reaching the premium level of the fix,' this is when comparing with online tariffs. This may or may not be the case with customers wanting a tariff other than the online deals.

Hope I've explained our policy in this instance backfoot. Let me know if I've misunderstood anything.

Malc