Hidden Tariffs?

backfoot

E.ON_Company_Representative:_Helena wrote: »

I have checked with our legal and regulatory team who point out that SLC25A allows this, with a reason. As I said, we think it is reasonable at a time of rising prices to offer a preferential product to existing customers.

This is not really my area at all, as you know we are here to give general customer service advise on billing etc, not to comment on our policy/business decisions.

Thanks Helena,

I can't see any reference in the SLC25A to the explanation 'with a reason'. To be honest, it sounds very wooly.

Nor do I subscribe to the view, that in the Gas and Electrcity market,there is any justification for prices paid by the vast majority of customers,to be subsidising preferential rates of a select group of customers.It seems to be a policy designed to discourage switching rather than competing fully and fairly in the full market.

I have asked Ofgem if they are happy with the policy.

MillicentBystander

Superb, backfoot. I too was confused by the 'with a reason' part. Talking of anti competition how about Eon's refusal to grant discounts on final bills? An exit fee by another name? But actually worse because this one is never ending...

echoecho_2

Airmike- there seems to be a discrepancy between what you say and what the e.on website says.

Helena- can you please confirm that both fixed price until April 2013 and fixed until October 2013 are billed at the same price? The only difference being that April 2013 is also open to new customers and has an exit fee?

Backfoot- my view is that this scenario is where energy companies are actually giving some benefit to their existing customer base. Companies seem to offer dirt cheap online tariffs (mainly taken up by new customers) which i expect are subsidised by the majority of customers. This is a case where the existing customer base are rewarded and it's not much, a few extra months at a fixed price and a waiver of exit fees.
I personally think that if of gem said e.on weren't allowed to do this, it wouldn't help anyone. E.on would simply stop doing this and then everyone would lose out.

I'm really pleased someone is fighting for the consumer- but I think this is something positive that you are fighting. There are a lot of problems in the utility sector, confusion marketing, inconsistency with discounts that of gem should be working on.

E.ON_Company_Representative:_Helena

echoecho wrote: »

Helena- can you please confirm that both fixed price until April 2013 and fixed until October 2013 are billed at the same price? The only difference being that April 2013 is also open to new customers and has an exit fee?

Yes

Helena

MillicentBystander

Going back to the OP, why would an Eon salesman risk censure/worse from his bosses by putting Cardew on an old,expired/hidden, lol, tariff that, from the figures he's shown on another thread, is actually 20% cheaper than the current (non increased) tariff so is effectively approx 35% cheaper than the current cheapest, post increase tariff? Surely they would be losing money on this deal?

backfoot

echoecho wrote: »

Airmike- there seems to be a discrepancy between what you say and what the e.on website says.

Helena- can you please confirm that both fixed price until April 2013 and fixed until October 2013 are billed at the same price? The only difference being that April 2013 is also open to new customers and has an exit fee?

Backfoot- my view is that this scenario is where energy companies are actually giving some benefit to their existing customer base. Companies seem to offer dirt cheap online tariffs (mainly taken up by new customers) which i expect are subsidised by the majority of customers. This is a case where the existing customer base are rewarded and it's not much, a few extra months at a fixed price and a waiver of exit fees.
I personally think that if of gem said e.on weren't allowed to do this, it wouldn't help anyone. E.on would simply stop doing this and then everyone would lose out.

I'm really pleased someone is fighting for the consumer- but I think this is something positive that you are fighting. There are a lot of problems in the utility sector, confusion marketing, inconsistency with discounts that of gem should be working on.

It's a tricky one isn't it. Maybe the thin edge of a wedge. More interested in the principle tbh than just Eon's case. Depends on your starting point, are they offering something or denying everyone else something? What's so sacrosanct about being an existing customer? Just a marketing ploy aimed at switchers?

Does it promote or stifle competiton? Are they just trying to capitalise on the rush to fixed products through fear?

Don't worry. I always fight for the customer. I have submitted a lot of customer views to Ofgem under the Retail Market Review. I also won a significant ruling on Termination Fees during this week.

echoecho_2

Thanks for your reply backfoot.

I'd actually like to see MORE existing customer only offers from the big 6 to reward loyalty. In my opinion this could actually promote competition rather than stifle it.

At the moment, companies seem to be going after new customers all the time by offering deals which top the comparison sites. Although these are usually available to all customers, most customers aren't like us on MSE where we're constantly checking our tariff.

I believe that at the moment, we have a system which relies on the apathy of the many to stay with a company and relies on short lived cheap deals to snare new customers.

I do think that more and more people are keeping a closer eye on the market. I would like to see suppliers do more to keep their customers as opposed to mainly concentrating on new acquisitions.

I am very much against adopting the model we see in the Telecoms/TV sector where threatening to cancel services results in 'magical' offers being summoned up...but I do believe in preferential treatment for existing customers on a loyalty basis.

For example, stay with us for two years and we'll give you an extra x% off your bill, or we'll give you £20.00. Some may argue that this could be similar to an exit fee, so I think it's important that suppliers don't use this 'bonus' when calculating annual costs. Another thing I'd like to see is suppliers offering boiler care products or insulation products at a discounted rate for customers who also take energy from the supplier. I even agree with suppliers offering existing customers a longer term on fixed/discounted tariffs. This would make me feel more valued by a supplier. I'm not stupid and know that the energy companies are businesses. However, if they treat me right, i'm more likely to stick with them and perhaps take up additional services from them.

I think this would make suppliers work harder to acquire new customers by competing more fiercely as these benefits would perhaps entice customers to stay where they are unless a really great deal came about.

I'm not exactly an optimist so I can't see this happening- hell, I know that even this offer is more of a marketing tactic by e.on to quell the rage of their customer base rather than a really competitive plan. But, I'd like to see existing customers treated more fairly.

backfoot

Echo,

I do agree with nearly all of the sentiment of your post. I also agree with some of the methods to reward loyalty to a Supplier.

In particular I would welcome Fixed term products of 3 to 5 years which reflected and passed on the purchasing power gained by guaranteed capacity. Regrettably, it's not working like that,the marketing execs have twisted the fixed product from a volume/loyalty discount to a premium to insure against the future.

I suspect License Condition 25 A was brought in to promote front end competiton rather than back end. Although the market is mature in time it is not mature in terms of Competitors and customers willing to shop around.

If the back end offers, or the fixes were significant rewards for loyalty,then I would feel a lot more comfortable. As it stands,we are seeing small inducements,perhaps just enough to keep the less determined from getting the best deal. BG now also seem to be offerring some ad hoc telephone backhanders. Plus the danger of back end rewards can trap customers against rising prices.( Npower deferred discount and Eon final bill and the now defeated Termination fees)

I am all for customers getting what we can, but I sense we are being shortchanged and many will just miss out on these small give aways.

Re the Eon offer, why on a fixed term product would they want to discriminate against new Customers? It does just appear to be a cynical retention strategy the more I think about it, despite Eon's nice words at the same time that prices are rising 20%.

As I said it's a tricky one.

Ofgem should have a view on all this. I don't think it hurts to ask where they are on it. They are paid top class people who are in control of such strategies....;)

Gerrard_8_lfc

What really gets me with E.ON is the fact when customers seek a better deal with another supplier they remove the discount in which the customer had agreed to in the first place i.e Save Online tariffs, E.ON seem fit to remove this so depending on which time of year you switch from them the "cancellation Charge" increases, Airmike or Eon Rep please could you advise why you company feels the is necessary or even fair ?

It is similar to nPowers double whammy cancellation charge if you switch before your £100 credit this also should be banned !.

Airmike23

if you appreciate, most company's tariffs, other than their standard tariff, have a cancellation charge. In Eon's current range of tariffs only the Save Online 3-9 Price Protection April 2013, and Fixed Price April 2013 have cancellation fees, all other tariffs still running and currently for sale are no canx charges, Eon's cancellation charge in comparison to the other suppliers on save Online is reasonable at £20 gas £10 electric (£30 total), bg for instance has a £60 canx charge on stuff like Discount Saver 2012, 4% discount tracker, the Websaver tariffs, and their fixed/capped deals have a £70 gas £30 electric charge, EDF is generally £50 or £60 canx charge depending on tariff, sse varies with tariff but anything from £50-80 and scottish power, ALL their tariffs have an early termination fee other than Standard, £51 and change. So the small loss of discount with Eon, will be far less than any early termination fee with one of Eon's competitors, even if you do have a tariff with a canx charge. On a personal note I agree that Early termination fees (ETF) should not be allowed, or nominal penalty, say £5 each fuel. I'm afraid Eon are no better or worse than any of the other companies, you could argue slightly better, altho many Eon tariffs have no early term charge, with the loss of discount on final bill, worse case scenarion is you lose up to 3 months worth of discount, which on a bill for £250 for example, that is £20, which is less than all Eons competitors ETF's, even if on an Eon tariff with an ETF for most part still be a lot less than the competitor etf. There's always a glass half empty outlook like your's Gerrard_8_lfc.