Energy and competition

sheffield_lad

Graham_Devon wrote: »

I'd be all for reducing the amount of tarrifs.

For electricity only, on Uswitch I get 80 results. 80! 80 different tarrifs from about 8 providers.

Standing charge. Non standing charge. Standing charge fixed. Non standing charge fixed. Standing charge green. Non standing charge green.

Price promise none standing charge eco Version 12 fixed, £55 switching credit promotion, Online V2*

* Exit fee of £13,043, unless you pay direct debit**

** Only available to those aged 54 years 11 months***

*** Not available in NI. Or England, Wales, Scotland.

And it goes on.

And on.....

Quite agree we need more clarity, but I don't go as far as some on the left who suggest no more online killer deals and have one standard tariff as that will only make the prices more expensive for the one's (us), who shop around for the better deals.

Graham_Devon

howee wrote: »

Quite agree we need more clarity, but I don't go as far as some on the left who suggest no more online killer deals and have one standard tariff as that will only make the prices more expensive for the one's (us), who shop around for the better deals.

I think up to 4 tarrifs would suffice for anyone.

I rang up last year to query my bill as I was having a hard time figuring out all the credits, the debits, the charges etc. Even the girl at the end couldn't figure it out. "Ahh I see Sir, you had a credit of £11.44 on such and such a day because you used 800 units. But there was a debit of £23.53 because you used 800 units." Eh... "Units Sir. You pay more for each unit at the start of every month. Your kettle costs you over tripple the amount on the 1st than it would on the 5th of the month, because, well, because"....."Because you sell your product at the lower cost per unit?".... "No, because it's the 1st of the Month Sir, triple costs 1st of the Month".

..."And whats the debit of £54.00"... "Thankyou please Sir, that is the debit, for the credit we made to you as a new customer, which will be released over 12m, which we didn't tell you about, but we credited to you when you first joined, so were taking it back now bit by bit.... I think Sir".

...."Can I interest you in signing up for Triple fuel version 28.3".

kabayiri

howee wrote: »

£125 profit per customer per year so 34p per day, do posters feel this is high? I bet if you poled customers/posters before this morning most would think that profit on an average £1350 per year bill would be higher than what amounts to less than 10% ask Tesco's how much they make on sausage's lol.

This actually makes me realise that the days of cheap energy are over it has NOTHING to do with the Dmail headlines of rip off britain, and fat cats it's the cost of fuel and sharing it with other emerging markets.

Come on be honest how many thought that energy companies made far more than that?

That's the profit from the retail side of the business. Remember, some of the suppliers make profit on the supply side too, selling into the wholesale market.

As is always the case, figures can be selectively presented and selectively interpreted.

Ofgem are culpable of the latter. The toothless old tiger is just trying to turn up the heat.

Joe_Bloggs

@kabayiri
Some say that the main energy suppliers are vertically integrated. I think this means that they have a profit sucking finger in every pie along the chain towards the consumer.
J_B.

DervProf

Graham_Devon wrote: »

I'd be all for reducing the amount of tarrifs.

For electricity only, on Uswitch I get 80 results. 80! 80 different tarrifs from about 8 providers.

Standing charge. Non standing charge. Standing charge fixed. Non standing charge fixed. Standing charge green. Non standing charge green.

Price promise none standing charge eco Version 12 fixed, £55 switching credit promotion, Online V2*

* Exit fee of £13,043, unless you pay direct debit**

** Only available to those aged 54 years 11 months***

*** Not available in NI. Or England, Wales, Scotland.

And it goes on.

And on.....

I feel your pain.

BTW. You forgot to include "offer only valid during a full moon when there is an "R" in the month".

DervProf

BTW. I`ve just switched to the cheapest deal, based on my last 12 months of energy use.

I'd like to think that I will actually get the cheapest energy deal for the next 12 moths, but no doubt I won't, even if my energy use is exactly the same as what I have used in the past year.......

Smoke and mirrors.

Brand new customers only, and all that.

sheffield_lad

DervProf wrote: »

BTW. I`ve just switched to the cheapest deal, based on my last 12 months of energy use.

I'd like to think that I will actually get the cheapest energy deal for the next 12 moths, but no doubt I won't, even if my energy use is exactly the same as what I have used in the past year.......

Smoke and mirrors.

Brand new customers only, and all that.

Most customers dont have to bother switching just picking the phone up to their current supplier and asking for their online tarrif will reduce most peoples bills by hundreds

michaels

Some one (a marketing person) had a good idea - why don't we sell a tariff with 'no standing charge'.

Unfortunately the economics of supplying gas or electircity means that even if no fuel is used it costs the supplier money to set up the account, do the billing etc etc. To make sure the suppliers cover this cost they introduced dual rate - ie the first units each year are more expensive. More complicated yes, but it allows 'no standing charge' marketing to work so hey, what's a little complexity?

However, then it gets more complicated as it would be possible to pick a low user tariff in summer and a high user tariff in winter and beat the utilities at their own game so instead they make an adjustment to the number of units in the high and low bands according to the time of year, making it difficult for anyone to have a clue how much a particualr tariff will cost over any bill period.

Then of course there is the need for a direct debit discount (cheaper to collect, less credit advance so a lower interest charge, fewer arrears to chase) and a dual fuel discount (administering gas and electric does not cost twice as much as adminsitering only one). Plus of course the prices of the two products can be adjusted so that a hot deal on one product can be offset by a dog on another.,

Then some people like to avoid uncertainty so might want a fixed tariff for a shorter or longer period for which they will pay a premium for the certainty just as you do for a fixed rate mortgage and it fact the 'early redemption pentalies' for fixed price deals remain much lower than those mortgages. As prices change so do fixed costs and many customers will be on legacy tariffs that adds complexity to comparisons.

However I would say that the tariffs on offer are more straight-forward than mobile tariffs and it is much easier (using an online comparison) to select the best tariff for your usage.

pqrdef

At one time, the dual rate tariff was the only tariff available. It was a sensible and satisfactory compromise. But consumer groups complained that light users were penalised, while suppliers complained that light users weren't paying enough.

So they switched to standing charges. This at least allowed them to argue rationally that there were costs involved in making a supply available even if no energy was consumed, whereas the notion of different prices for identical units of energy was easily mocked.

But the public didn't like it at all. They had this idea that if you didn't use anything you shouldn't pay anything.

So they introduced the No Standing Charge tariff, with higher unit prices. And a blaze of PR telling us they were supporting consumer choice, as if it were just a matter of taste - while hinting as far as they dared that the new tariff was so much better. The aim was to get as many people as possible to switch to the NSC tariff. Never did they point out that the new tariff was only appropriate for light users and everybody else would be better off not switching. Many people switched who shouldn't have.

Consumer groups were chagrined to discover that having got what they wanted, it would work out more expensive for most users. And even more so to realise that what they really wanted now was the return of the dual-rate tariff whose abolition they had agitated for.

And so we end up with the present mess, and Ofgem allows it to fester. It would of course be easy to ensure that all consumers automatically get the best of both worlds, simply by returning to dual-rate tariffs all round. But then people would moan about consumers not having a choice. And of course they'd moan about light users being penalised.

Meanwhile, confusion can still be exploited. One company offers an Online Saver which only comes in an NSC version. This gotcha isn't exactly emphasized, nor is its significance explained at all. Cheaper than the normal NSC tariff, certainly, but so far I haven't been able to discover how it compares with the normal SC tariff.

DervProf

howee wrote: »

Most customers dont have to bother switching just picking the phone up to their current supplier and asking for their online tarrif will reduce most peoples bills by hundreds

Even with my modest energy usage, the difference in cost between different suppliers online tarrifs is quite large.

When I signed on to last year's online tarrif, why didn't the supplier keep me on it automatically?

When I did phone my current supplier for "a better deal", the very uninterested sounding woman took nearly 5 minutes to come back with "we've got this fixed rate tarrif that lasts until 2015".

Seems to me that these energy suppliers don't value customer loyalty, and rely on customer apathy.

From now it, it's a yearly task to see if it is worth switching suppliers.