MSE News: Npower to hike energy prices in January

MillicentBystander

Gerrard_8_lfc wrote: »

I think BG reduced the actual cost of tier 1 and increased the threshold.

But why would they do that? Is it to make the deal better or worse for the punter?

SwanJon

It makes the rise more than 7% for lower than average users, 7% for the magic average, and less than 7% for above average users (I think, may have to do the maths again.)

SnowMan

The article makes a good point that the headline increase probably isn’t the real increase that is taking place.

I have just noticed Consumer Focus’s letter of 2nd December to Ofgem. This is a letter where they ask Ofgem to look into the ridiculously complex, anticompetitive and deliberately confusing tariff and pricing structure. It is worth a read and can be accessed from this page of the Consumer Focus website.

In relation to price increases they give a good example on page 4 of the way a headline percentage increase doesn’t reflect the true increase, which I quote.

Scottish Power had been offering a dual fuel prompt pay discount of £150 to customers paying by standard credit. On 25 November 2010, the company reduced the discount to £65, and increased its prices by 4 per cent. However, the combination of the reduced prompt pay discount and price increase will mean a 12 per cent increase for these customers (based on a medium user).


While the letter is excellent, I don’t think it goes far enough. Rather than trying to get the energy companies and comparison sites to explain a hugely complex system more openly and clearly, they should be advocating making the system itself simple in the first place.

For example Consumer Focus could advocate that legislation is put into place for a complete abolition of the existing pricing structure regime and in its place is put a simple charging structure but one which still allows the energy companies to compete on price.

One way of doing this, and I have mentioned this before, and others may have other ideas, would be to have two simple tariffs that all companies must have.

One tariff would be a variable tariff which would be a single unit price (a per unit) for each unit used together with a standing charge (b). No withdrawal fees would be allowed. A simple direct debit discount would be allowed (e.g. x%) and a possible an on-line discount (e.g. y%) and a dual fuel discount (e.g. w%) and there would be a discount (e.g. z% for those qualifying for social tariffs). Companies could choose their own values for a, b, x, w,y and z but would be required to clearly communicate those rates. No other complications would be allowed. In fact in communicating to consumers you would only need two variables the unit price and standing charge (the explanation of the tarriff would explain the rest e.g. dual fuel, montly direct debit, on line tarriff)

The second would be a fixed rate tariff. That would a have a unit rate (fixed through the term), and again a simple direct debit discount and a simple on-line discount, a simple duel fuel discount and a social tariff discount. A penalty could be applied for customers who left before the end of the fixed term because the tarriff is fixed.


I am not sure what the review is that Consumer Focus mention is taking place at the moment at Ofgem, but is this a good time for Martin to campaign for change in a similar way to the successful ISA transfer campaign?

Gunderful

Not really a surprise for me, my frustration is the way in which prices seem to go up when wholesale prices rise but then don't change when the opposite happens. NPower have a baffling 38 different tariffs, how exactly is this supposed to allow fair competition and price transparency for customers?

davidgmmafan

I'm not sure there was any successful ISA transfer campaign. I mean there are rules in place but no teeth, a lot like the energy industry!!!

Regarding online tariffs

'PS I would hazard a guess that there are still more punters on standard deals than online only deals in the UK.'

I believe its not even close, something like 5% of customers are on an online tariff. I can't recall the source for this though

mhendo

Looks like my increase isn't going to be anywhere near the "average" 5%. Can't see the new rates on the Npower site, but based on the amounts quoted on EnergyHelpLine, I'm looking at a 22% increase based on 6000kWh of Electric in London region, on SignOnline18 (no gas). I'm guessing not many are getting hit that hard!

Nothing better to switch to really, as I think I have a £20 exit fee, plus won't get the £42 DD discount until June.

Does anyone know if Npower charge the exit fee for moving one tariff to another? And I assume the £42 annual discount would be another 12 months from now? If so, not worth moving to SignOnline20, as it only saves £26.

davidgmmafan

Gunderful wrote: »

Not really a surprise for me, my frustration is the way in which prices seem to go up when wholesale prices rise but then don't change when the opposite happens. NPower have a baffling 38 different tariffs, how exactly is this supposed to allow fair competition and price transparency for customers?

I understand this confusion about the time lag for price reductions. The trouble is there are other things the companies have to pay for too. I'm really concerned about the cost of green energy. I have seen rates of 15 & 16 pence per unit. This is more than the price to the customer of some prices now, so they are going to increase prices...

backfoot

SnowMan wrote: »

The article makes a good point that the headline increase probably isn’t the real increase that is taking place.

I have just noticed Consumer Focus’s letter of 2nd December to Ofgem. This is a letter where they ask Ofgem to look into the ridiculously complex, anticompetitive and deliberately confusing tariff and pricing structure. It is worth a read and can be accessed from this page of the Consumer Focus website.

In relation to price increases they give a good example on page 4 of the way a headline percentage increase doesn’t reflect the true increase, which I quote.

Scottish Power had been offering a dual fuel prompt pay discount of £150 to customers paying by standard credit. On 25 November 2010, the company reduced the discount to £65, and increased its prices by 4 per cent. However, the combination of the reduced prompt pay discount and price increase will mean a 12 per cent increase for these customers (based on a medium user).


While the letter is excellent, I don’t think it goes far enough. Rather than trying to get the energy companies and comparison sites to explain a hugely complex system more openly and clearly, they should be advocating making the system itself simple in the first place.

For example Consumer Focus could advocate that legislation is put into place for a complete abolition of the existing pricing structure regime and in its place is put a simple charging structure but one which still allows the energy companies to compete on price.

One way of doing this, and I have mentioned this before, and others may have other ideas, would be to have two simple tariffs that all companies must have.

One tariff would be a variable tariff which would be a single unit price (a per unit) for each unit used together with a standing charge (b). No withdrawal fees would be allowed. A simple direct debit discount would be allowed (e.g. x%) and a possible an on-line discount (e.g. y%) and a dual fuel discount (e.g. w%) and there would be a discount (e.g. z% for those qualifying for social tariffs). Companies could choose their own values for a, b, x, w,y and z but would be required to clearly communicate those rates. No other complications would be allowed. In fact in communicating to consumers you would only need two variables the unit price and standing charge (the explanation of the tarriff would explain the rest e.g. dual fuel, montly direct debit, on line tarriff)

The second would be a fixed rate tariff. That would a have a unit rate (fixed through the term), and again a simple direct debit discount and a simple on-line discount, a simple duel fuel discount and a social tariff discount. A penalty could be applied for customers who left before the end of the fixed term because the tarriff is fixed.


I am not sure what the review is that Consumer Focus mention is taking place at the moment at Ofgem, but is this a good time for Martin to campaign for change in a similar way to the successful ISA transfer campaign?

Outstanding post. :T

2010

Gerrard_8_lfc wrote: »

I think BG reduced the actual cost of tier 1 and increased the threshold.

They did reduce the cost of tier one from 25.20p per kwh to 23.12 ex vat, a miserly 2p.
BUT you now have to use 180 kwh instead of 125 to get onto tier two, an increase of 55 kwh.
They have also put up the price of tier two.

The big 6 should be investigated by the competition commission and not Ofgem because they simply are not competing.

As for the switching sites, these vultures make their money by getting you to change supplier and guess who pays these companies a fat fee of about £50

---

oh yes

---

the energy providers.
No wonder they can give you a rotten bottle of bubbly for changing.

davidgmmafan

"The big 6 should be investigated by the competition commission and not Ofgem because they simply are not competing."

So why do we have the cheapest prices in Europe? Nobody complains when petrol stations change prices at virtually the same time and see it as a sign that they are involved in a competitive market.

PS

"As for the switching sites, these vultures make their money by getting you to change supplier and guess who pays these companies a fat fee of about £50

---

oh yes

---

the energy providers.
No wonder they can give you a rotten bottle of bubbly for changing. "

Use a cashback site and get in on the action yourself.