Ofgem ending Prompt Pay Discount for energy companies

double-slit

I received a letter from British Gas about the new price increases,at the end of the letter.

You currently receive a Prompt Pay discount for paying you bill early.Unfortunately,Ofgem has decided that energy companies are no longer allowed to offer this type of discount.I am sorry to say that we have to withdraw this discount from 23 Nov 2013,although we are adjusting our prices to help compensate for this change.

Is there any logical reason for Ofgem to withdraw this discount,my understanding was they are the voice of the consumer.
Can any one shed any light on there thinking.

spiro

I think they are doing the same with the paperless billing discount. Its all part of simplifying tariffs. Less tariffs, standing charge & 1 rate, limited discounts.

Bluebirdman_of_Alcathays

OFGEM are introducing a raft of changes, none of which are beneficial to the consumer. Too many dinners at Le Gavroche (with port at the club afterwards) with the likes of Phil Bentley and Ian Marchant i'm afraid!

Bark01

spiro wrote: »

I think they are doing the same with the paperless billing discount. Its all part of simplifying tariffs. Less tariffs, standing charge & 1 rate, limited discounts.

Only discounts allowed are:

Payment type - This must be built into either the standing charge or unit rate.

Dual Fuel - Must be split equally between fuels and be a £ per year amount accrued daily

Online Discount- Must be a £ per year discount accrued daily

Paperless and online could be viewed as the same thing, so I think it is still allowed.

daveyjp

Discount as a percentage of DD payment is also going. It will probably become a fixed discount off the standing charge.

Voyager2002

I think this is about David Cameron's concern that the range of tariffs is too confusing for the consumer. Offering a discount for early payment is seen as being unfair on people who do not or cannot pay early, and so forth.

If only they would do something about genuinely confusing behaviour, such as the the way NPower 'tapers' consumption, meaning that even on-line price comparison sites give misleading results.

Nada666

Voyager2002 wrote: »

If only they would do something about genuinely confusing behaviour, such as the the way NPower 'tapers' consumption, meaning that even on-line price comparison sites give misleading results.

Do you mean the winter weighting of tier 1 costs? Ofgem have already done something about that. (Though it was not misleading per se - their doing that but then calculating bills only every six months without accounting for said tapering, now THAT was confusing and misleading.)

Nada666

Bark01 wrote: »

Only discounts allowed are:

Payment type - This must be built into either the standing charge or unit rate.

Dual Fuel - Must be split equally between fuels and be a £ per year amount accrued daily

Online Discount- Must be a £ per year discount accrued daily

Paperless and online could be viewed as the same thing, so I think it is still allowed.

Are you (rather, they ) having a laugh?

Being naive I assumed they wanted tariffs to be presented thusly:

NastyCo Standard Tariff
Basic Price
Gas: £65, 4.5p per kWh
Ele: £65, 14.5p per kWh
Discounts
Direct debit: £54 gas, £30 electricity per year
Dual fuel: £10 per year
Online account: £24 per year

Fair enough, won't go into the SC issue here.

Instead of that you are seriously suggesting that the tariff summary will have to be presented:

NastyCo Standard Tariff
Paying quarterly on receipt of bill
Gas only: 17.85p, 4.5p per kWh
Ele only: 17.85p, 14.5p per kWh
G and E, G: 15.15p, 4.5p per kWh
G and E, E: 15.15p, 14.5p per kWh
Paying quarterly online
Gas only: 14.55p, 4.5p per kWh
Ele only: 14.55p, 14.5p per kWh
G and E, G: 11.85p, 4.5p per kWh
G and E, E: 11.85p, 14.5p per kWh
Paying by direct debit receiving paper bill
Gas only: 3.56p, 4.5p per kWh
Ele only: 9.65p, 14.5p per kWh
G and E, G: 2.17p, 4.5p per kWh
G and E, E: 8.25p, 14.5p per kWh
Paying by direct debit online (I gave up doing the sums about here)
Gas only: 0p, 4.5p per kWh
Ele only: 2.5p, 14.5p per kWh
G and E, G: 0p, 4.5p per kWh
G and E, E: 1p, 14.5p per kWh
(give up working out combinations I've missed)

And that is for a single tariff - other tariff may use a discount per kWh on the unit price for direct debits. And actual figures will be to three decimal places.

This makes it easier for consumers to pick the correct tariff??????

I have posted a separate thread to discuss this