MSE News: Escape energy lock-ins as prices soar

meherenow

Hmm, I have moved to Npower Go Fix 6 so I see a battle on my hands next year perhaps!

Of course I intend to get the cheapest deal when the Go Fix 6 ends on 31st July 2012 - now, my tariff started on 1st August 2011, so technically that will be exactly one year, so I should qualify for the £40 discount (elec only).

Tell me though, how WOULD one go about switching when the tariff is up, I certainly don't want to move on to their standard tariff, how exactly would I go about switching without incurring either the early termination penalty, or losing my direct debit discount AND not paying standard rates for a while - is it just the same "i reject your price increase and move to a standard tariff therefore I am switching supplier and you do not raise my tariff cost until I do so" letter? Because if I instigate a move before 31st July then will that not trigger all the early termination clauses?

Or am I stuck at their standard rate while the transfer is sorted out? Surely not?!?

jalexa

meherenow wrote: »

Or am I stuck at their standard rate while the transfer is sorted out? Surely not?!?

More likely you will be offered (if you ask) a maturity tariff (which may or may not appear on comparsion websites). Whether that is a good deal or not is up to you to calculate. Fortunately your maturity is at a time of low use minimizing the marginal cost which you may just need to lump.

meherenow

jalexa wrote: »

More likely you will be offered (if you ask) a maturity tariff (which may or may not appear on comparsion websites). Whether that is a good deal or not is up to you to calculate. Fortunately your maturity is at a time of low use minimizing the marginal cost which you may just need to lump.

So when would I be able to initiate a switch? Do I need to wait until 31st July has passed before getting the ball rolling so I do not incur penalties?

jalexa

meherenow wrote: »

So when would I be able to initiate a switch? Do I need to wait until 31st July has passed before getting the ball rolling so I do not incur penalties?

Well in answer to your direct question, transfers take between 4 and 6 weeks. I imagine the "4 weeks" relates to the 28 day notice period in standard tariffs. I do not know whether a losing supplier can "waive" the notice period (at your cost).

I anticipated the notice period with a certain "13th month discount" supplier. I didn't defeat the small print entitlement but I did defeat the supplier's billing system and customer service adviser competence. I had a reason (time limited availability) of other tariffs, but in general I would not advise anticipating the discount. But up to you the manage the risk (for potentially marginal savings).

In your case I suggest you wait and see what tariifs are available.:cool: Maybe by then backfoot will have clarified the regulatory intent.:D

Consumerist

backfoot wrote: »

. . . They should pay the accrued discount up to the point that a switch is completed . . .

That's the way I see it too.

I'm gathering these, and my own, thoughts together for a submission to Consumer Focus. I may need to get back to you, backfoot, for some guidance on presentation and how to get the to right person, if that's ok.

backfoot

Hi Consumerist,

More than happy to help.

I would sugesst you put forward your draft for all to see. There are many other competent posters who can provide useful input.When you have a draft you are comfortable with,we can decide where the most receptive audience will be.

Are you an npower customer?That may affect the strategy for any complaint/representation.

I am delighted someone else wants to fight the corner. :T

Consumerist

backfoot wrote: »

Hi Consumerist,
More than happy to help.
I would sugesst you put forward your draft for all to see. There are many other competent posters who can provide useful input.When you have a draft you are comfortable with,we can decide where the most receptive audience will be.
Are you an npower customer?That may affect the strategy for any complaint/representation.
I am delighted someone else wants to fight the corner.

Thanks for the encouragement. I'm not going to be able to do too much for a few days but posting the draft seems a good idea which will help me and also, hopefully, others to get into the fight too. United we stand ... and all that.

I'm not an NPower customer at the moment but my fixed contract ends in a few months and, as a prospective new NPower customer (no chance), the intention of my submission, at the moment, anyway, will be to the use NPower Sign Online 23 tariff as a representative example of the increasing use of deferred discounts as a means of disadvantaging consumers by being anti-competitive in their nature.

Consumerist

Ok. Sooner than expected but here's my draft

Dear Sirs,

Provisional discounts on variable energy tariffs

I write to express my concern regarding energy companies' increasing use of provisional discounts included in their tariffs but which are not actually paid until the last day of a one-year variable-tariff contract which has been imposed on the customer. Under the Confidence Code, such timing allows the discount to be deducted from the tariff costs calculated by price comparison sites.

The end result of this practice is that suppliers can offer low prices when a tariff is launched and then increase prices later, safe in the knowledge that discounts will not be paid to a customer who rejects the price rise and switches supplier; the forfeited discount becomes an effective termination charge.

Although it is a simple matter for the informed to strip out these provisional discounts when evaluating a tariff, it is widely accepted that a high proportion of customers simply do not understand their energy bills and rely almost entirely on comparison-site tables to make their switching decisions. It is probable that most [of those] consumers are not even aware that discounts may be lost if they switch because they have not been able to make head or tail of the ever-more-intricate terms & conditions associated with a multitude of different tariffs on offer.

In my view, genuine discounts should be incorporated into customers' bills as either reduced unit prices or as a pro-rata proportion of a fixed discount deducted from each monthly/quarterly bill. Energy companies are familiar with daily standing charges so could even apply discounts daily.

Given the advantage to suppliers of boosting their position in comparison tables, the reason the practice [STRIKE]of offering provisional discounts[/STRIKE] is expanding seems clear; if bad practice benefits a company, all companies will adopt that bad practice so as to enjoy the same benefit. In these circumstances only a regulator can prohibit the practice to re-create a level playing field.

Accordingly, as a first step, I would ask whether Consumer Focus considers that changes to the Confidence Code might be warranted to prevent undue advantage being gained in comparison tables by energy suppliers who include provisional discounts in their variable tariffs.

Secondly, I would value your opinion as to whether their effect on consumers, when variable tariffs increase and customers want to switch, might be anti-competitive in their nature.

Regards,

I haven't included the NPower - Sign Online 23 as a representative example, as originally intended, so as to keep it as brief as possible. I don't want to induce coma before the reader gets to the end.

Constructive criticism welcome.

jalexa

Consumerist wrote: »

here's my draft

Constructive criticism welcome.

Not commenting directly on your draft but to clarify the December 2010 revision of the Consumer Focus Confidence Code (with thanks to backfoot).

There seems to be at least 2 practices at work (both compliant with the Code).

NPower credits the discount on the last day of the (12 month) comparison period. This allows the discount to be included in (i.e. discounted from) the headline cost, guaranteeing an "enhanced" placing in the comparison. For "enhanced" generally read "top".

Further, NPower includes the discount in (i.e. reduces) each monthly payment.

The other main "deferred discount" player is Atlantic who have a subtly different application of the Code rules. Atlantic pays the discount in the "13th month". Because of this they cannot include the discount in the comparison headline cost. Furthermore, Atlantic does not include the discount in the monthly payments. In one sense that may seem "fairer" (on listing), however IMO it represents a "free loan", (or a "sneaky" 8% increase in margins if the discount is not earned).

Personally, I particularly dislike the "Atlantic" method.

Unless there is Ofgem clarification and guidance to the contrary (your objective) IMO both "discounts" are liable to be forfeited if not "earned" by completing the qualifying period of custom.

backfoot

Consumerist,

I think you have written an excellent letter.

I would personally be specific in naming Npower and Atlantic and simply name the most recent tariff of each where this practice is seen.CF can find the detail.

I would also say that Npower seem to have cynically changed the Terms to fall inside the one year parameter while essentially operating the same policy as before, which excluded the 'conditional discount' from the comparisons.

I think it would also be helpful to say what many posters have said,that the deferred discount effectively becomes a termination fee following a price increase.

As Ofgem have ruled that termination fees are not payable in these circumstances,it should follow that these Principal Terms of the contract, should still be honoured under SLC 23 .i.e. the accrued equivalent discount.

I like your concluding questions.