MSE News: Confusion over David Cameron's energy pledge

Cardew

victor2 wrote: »

While I think it is a good concept to provide a means for comparing energy suppliers' charges, how long will it be before they tailor their "best" tariff to be the cheapest for the government defined averge user?
Car manufacturers are quite adept at setting their engine management systems to give the best results for the standard fuel consumption tests.

Exactly correct. They also used to select gear ratios specifically so 0-60mph time could be rachieved in second gear and hence faster than rivals who needed an extra gear change

In fact some people think that the Utility companies have 'tailored' their charges to be optimum at the 16,500kWh/3,300kWh gas/electricity consumption of UK Mr Average customer. In the media they often say the BG/eon/Npower etc have the cheapest tariff of £xxxx

Scarum

So what exactly have Ofgem been doing these since it's inauguration?

And where did Martin's 80% of customers would like a simpler system even if more expensive? Was this one of his on-line polls?

I don't think choosing an energy supplier or tariff is complex or a big deal. If you can't check on-line pick up a phone and call the supplier for quotes. We do the same thing for car insurance.

For those who have problems in communicating obviously the energy supplier needs to know about their situation. How difficult is that? What has Ofgem been doing?

SnowMan

Link to OFGEM press release today. They are consulting on simpler tariffs.

http://www.ofgem.gov.uk/Media/PressRel/Documents1/20121019_RMR.pdf

Pretty ironic that OFGEM allowed the complex system of tariffs to develop in the first place.

MillicentBystander

victor2 wrote: »

While I think it is a good concept to provide a means for comparing energy suppliers' charges, how long will it be before they tailor their "best" tariff to be the cheapest for the government defined averge user?
Car manufacturers are quite adept at setting their engine management systems to give the best results for the standard fuel consumption tests.

They have been doing it for years!

wantanswers

http://www.ofgem.gov.uk/About%20us/Pages/AboutUsPage.aspx

Says it all i'm afraid....Jobs for the boy's.

Five year old school children have more sense, probably clout for that matter!

wantanswers

Scarum wrote: »

So what exactly have Ofgem been doing these since it's inauguration?

And where did Martin's 80% of customers would like a simpler system even if more expensive? Was this one of his on-line polls?

I don't think choosing an energy supplier or tariff is complex or a big deal. If you can't check on-line pick up a phone and call the supplier for quotes. We do the same thing for car insurance.

For those who have problems in communicating obviously the energy supplier needs to know about their situation. How difficult is that? What has Ofgem been doing?

Many older people still having the pride to live in their own homes will have difficulty in communicating and indeed understanding what a BL&&dy Tariff is....Just what are they doing about that?

wantanswers

Young families:

Many young families are in temporary jobs and in some case needing two in order to make ends meet. Some are working all hours god sends....just how do they find time to compare the market?

What is Cameron and Ofgem doing about this?

In my parents days they had one area British Company providing Gas, one area British Company supplying Electric, one area British Company supplying water,....where's it all gone wrong (its Foreign Owned).

diamonds

Maggie T got it all wrong, privitisation did not work for consumers, it created customer service jobs yes, but also wealth for shareholders, this is a step in the right direction.

Even if they get it not 100% its easier to change existing legislation than to start a draft of new legislation.

tichtich

It's not clear to me whether the PM's proposed change (whatever exactly it turns out to be) is aimed at reducing bills overall, or just distributing the pain more fairly by ending the penalizing of people who lack the time, ability or inclination to switch.

Moving people to cheaper tariffs will probably not in itself reduce bills overall, as energy companies can just change their tariffs to compensate.

Forcing each company to offer only one tariff might help with competition as well as fairness, as it would make comparisons easier. As things stand, split tariffs (or standing charges) would still mean that you can't reduce different tariffs to a single number. However, a split tariff (for a particular fuel) could be represented by a single number if it had to be split at a standard stipulated consumption point, with the higher and lower rates maintained in a standard stipulated ratio. Also, banning dual fuel discounts could then free people to choose their gas and electricity tariffs separately (from different suppliers) on the basis of a single number each.

It seems odd to try and reduce prices by banning discounted tariffs. But it might work, by making the market more transparent and competitive.

tichtich

Cardew wrote: »

Apparently the statement by the Energy minister now states that Utility companies must 'offer' customers the cheapest tariff, instead of 'move them' to the cheapest tariff.

So if they are not on the internet, does that 'offer' not apply?

Indeed how on earth will any Utility company know what is the best tariff. Does the customer have gas CH,(or just gas for cooker) Oil/LPG/solid fuel/storage heaters.

What type of property? standard of insulation, Do they work? go to bed early/late, live alone, or 15 people in house. Cook with gas or electric, bath or shower(or neither!!)

After customer has been in property, say, a year the company might have a good idea of the most suitable tariff, However what is the health warning on shares? - 'past performance is no indication of future etc.'

Woe betide any company who thinks it is offering the best tariff, but it turns out they would have been better off on a different tariff from the company.

Very good points. And that's not even mentioning fixed tariffs, which add another element of uncertainty into which tariff is best. If companies are required to recommend the tariff which is cheapest right now, people may miss out on good fixed tariffs. But if the company recommends a promising fixed tariff, the customer could end up worse off, if prices rise less than expected. So the customer's choice cannot be reduced to a no-brainer, as the policy seems to assume. What's more, if some choices are close to being no-brainers (as arguably some of the recent fixes might have been for someone on a standard variable tariff) the companies will no doubt find ways of making the choices more difficult again.

As far as I can see, the only way to achieve whatever it is the government is trying to achieve would be to restrict the companies to offering simpler tariffs.