Tiers of joy for British Gas?

Irratus_Rusticus

When I checked my recent Websaver 11 bill using British Gas's quoted tariff details and discounts, I calculated the electricity cost as 49p cheaper than BG did (using the exact same rounding). I was going to ignore this small difference until I got to thinking how many customers BG has and the overall effect of un-transparent extra costs.

We are all supposed to be able to "compare tariffs" and switch easily. So shouldn't the calculations be transparent? 'Calorific value' of gas might be for nerds among us but it shouldn't be this hard to find the details.

I dug deeper into my bill and it led me to BG's bold type statement: "Up to 180 kWhs" tier 1 charges for electricity.

BG urged me in a recent tariff mailshot to 'please bear in mind' when comparing prices that BG uses 'fewer units' for its tier 1 calculation than other companies.

I receive 'quarterly' bills charging me for energy used in the physical days between two meter readings. Clearly the "Up to 180 kWhs" didn't mean on each bill because my billed tier 1 kWhs were far more.

BG helpfully explained that it must supply four bills per year, so calculates tier 1 usage on any particular bill 'pro rata'. I assumed pro-rata meant for the physical days billed: 180 x 4 /365 = 1.97 kWhs a day. Turns out BG uses a theoretical 'quarter' of 90 days when calculating tier 1 use: 180 x 4 /360 = 2 kWhs a day.

But what's 0.03 kWhs per day between friends? How about maybe £20 million net profit for BG? :T

Here's the clever bit: Even though the 2 kWh tier 1 daily limit is calculated using a 360 day year, it is charged to customers for each and every physical day billed --- and there are 365 of those in a year. You might wonder why BG would choose to use this method?

365 days @ 0.03 = 10.95 kWhs extra tier 1 charged per year. The difference between tier 1 and tier 2 on my tariff is 15p per kWh (excl VAT). Say there are 12 million customers on roughly the same split: BG's little tweak adds nearly £20 million extra profit for every 365 physical days it bills its customers on two tariffs!

How does BG explain using a theoretical accounting quarter when attributing tier 1 usage to the physical days billed? And in light of this, how transparent is "Up to 180 kWhs" at tier 1 meant to be?

BG told me things 'average out' in the end. The flaw with this explanation is that a) customers shouldn't have to remain with the same company for years to realise quoted tariffs and b) the explanation is meaningless as utility companies can issue bills for widely varied periods in any given 'quarter'.

In the past I've received four bills in a row totalling 373 days followed on by another four in a row totalling 383 days: 756 days billed in eight quarters. When does the 90 day theoretical quarter ever average out? Two years? Three? Ten?

How does BG legally get away with this? Is it alone? Energy customers are billed for physical days, not theoretical ones.
For once it would be nice to see such 'clever ' accounting favouring the customer.:rotfl:

victor2

Don't know about BG, but with my E.On bills they have taken the number of days being billed and applied that pro-rata to the annual tier1 allocation. So a bill covering 90 days with an annual tier1 allocation of 900kWh works out at 900 x 90/365 which equals 222kWh (rounded to the nearest unit) for the billing period. So it would bill for 220kWh at the tier1 rate. It's not a daily allowance and it is incorrect to think of it that way - if you use no electricity on a particular day, that doesn't wipe out that day's tier1 allocation, it effectively gets added to the rest. Don't know if they use 365.25 days in a year to account for leap years. The 90 day figure comes out the same anyway.
My spreadsheet calculation of the bills has consistently come out to within a penny or two of E.On's. Gas is another question as you suggested with the calorific value. Again, in my experience with E.On I found that they used a single value for the period billed which was a fraction less than the average of the daily CV figures published by National Grid for my area and made the bill a few pence less than I had calculated, but that really is anorak territory!:)

moonrakerz

Very droll................:T:T

Irratus_Rusticus

victor2 wrote: »

It's not a daily allowance and it is incorrect to think of it that way - if you use no electricity on a particular day, that doesn't wipe out that day's tier1 allocation, it effectively gets added to the rest.

Hi, like you, my spreadsheet calcs when with EDF worked to the penny. But BG also had a quirky way of counting the day of the first reading into the days billed...helped to add yet another 2 kWhs at tier 1!

Maybe I'm missing your point but surely "adding the daily allowance" to days not used isn't the issue?

If I use X kWhs over Y physical days billed, BG will multiply 2 kWhs by Y to arrive at my tier 1 charges. It is the tweak using a 360 day year to arrive at 2 kWhs instead of 1.97 that's clever.

Also, if BG wanted to be transparent, why just quote "Up to 180 kWhs" for tier 1? What does it mean? If I receive four bills covering Z days (and Z could, like I said, be up to 380+ days) BG will charge me 2 kWhs for each of those physical days at tier 1, won't they?

BG just sent me a bill for over 100 days and there was no 180 kWh cut-off and there won't be in the next bill or the next. "Up to 180 kWhs" at tier 1 seems meaningless.

And the added bonus to BG is that they only discount the bill based on the tier 2 calculation they do. It's a win-win to BG.

victor2

Irratus_Rusticus wrote: »

If I use X kWhs over Y physical days billed, BG will multiply 2 kWhs by Y to arrive at my tier 1 charges. It is the tweak using a 360 day year to arrive at 2 kWhs instead of 1.97 that's clever.

Depends how BG do it I suppose. They say

Tier 1 rates apply to the first 720 kWh per year, pro rated across your billing period.

If they are saying that is 2kWh per day billed and not actually doing it pro-rata so that over an exact year you are paying for 720kWh at tier1, then I would think you would have a case against them.

Irratus_Rusticus

victor2 wrote: »

They say "Tier 1 rates apply to the first 720 kWh per year, pro rated across your billing period."

You've hit the nail on the head. What's "per year" in BG speak?

Customers might imagine it is four "quarters" or maybe even 365 days. How many of us add up the tier 1 kWhs over 4 bills?

I'm no fan of BG - have found their headline written promises on discounts wrong in the past -- and I only just came back based on a comparison site and now face 22% hike in gas and 19% hike in electricity on Websaver 11, so 49p tweaked on a bill is the least of my worries with them! :mad:

JSR

I just checked my last bill from BG covering 31 days and I was billed 61 kW/h at Tier 1. I calculate 61.15 kW/h as the correct pro-rated amount so they must have rounded down. Maybe your bill was rounded up?

Irratus_Rusticus

@ JSR.

Mmm. BG confirmed on the phone yesterday that they calculate tier 1 on a 360 day year as: 180 kWhs x 4 / 360, so either they only do that on my tariff or I've miffed them in the past?

I should say for the sake of full transparency (before a select committee comes after me) that BG have refunded me the 49 pence.:j

JSR

I'm on a different tariff to you. Online Saver 3 with Energy Smart so I get a proper bill every month rather than quarterly. Perhaps that explains the difference. Although, TBH, I wouldn't put much stock in what customer services say. IME they have a less of a clue about their complicated billing arrangements than us customers.

Nice work on the 49p. :money:

Irratus_Rusticus

kjsmith7 wrote: »

I think this is incorrect. Perhaps the agent you spoke with was confused or mis-informed?

I'm beginning to think maybe this is true.

My recent bill was a bit odd to start with. BG broke my electricity down into three sets of meter reads and the first was, quote:-
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
02 Apr 2011 - actual 18119
03 Apr 2011 - estimated 18132
= 13 kWhs used over 2 days (estimated)

Usage charge:
First 4 kWhs x 22.785 p
Next 9 kWhs x 7.704p
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Seeing this made me check the figures for the whole bill as I didn't see how two consecutive dates could become 2 days @ 4 kWhs on tier 1.

The rest is history and I got my 49p back.

It doesn't help when BG folk tell you on the phone they use 360 days to justify the 2kWhs and then it seems this isn't true. But at least BG isn't making an extra 20 million quid it doesn't need! :rotfl:

Cardew

kjsmith7 wrote: »

Tier 1 = 720kWh per year divided by 365 days in a year = 1.972602739...... kWh per day at tier 1

1.972602739 x 21 days = 41.42kWh at Tier 1

To be really pedantic! BG used to work out the pro rata daily rate by dividing the Tier 1 allocation by 365.25 days to account for leap years!

So 720 divided by 365.25 x 21days = 41.396kWh at Tier 1

That amounts to a 'huge' discrepancy in favour of the customer 0.4118kWh per year! must be worth at least 7 or 8 pence!!;)