MSE News: Energy customers 'pay too much'

Former_MSE_Helen

Customers of the big six energy suppliers are paying up to £234 a year too much for their gas and electricity bills...

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Energy customers 'pay too much'




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Nada666

Ridiculous story.

Are Caroline Flint et al really wanting the price of cheapest tariffs to increase by £200 so lazy people can save £34 per year? What other result do they want?

It takes two minutes once every twelve or fifteen months to see what new fix to choose. Or you can do that every quarter if you like. Yes, you may have to take ten or fifteen minutes once or twice getting your head round what to do - but that is a once in a lifetime thing to learn.

And if choice is restricted even further those outside the average consumption will face even more disadvantage than under the current reforms.

michaels

Don't want to disappoint folks but if everyone was on the lowest tariff based on the quoted profit figures the energy suppliers would all be loss making, hardly sustainable. So if the 50% of people who are overpaying stop doing so then the other 50% who do switch reguarly will almost certainly have to pay more.

Also currently prices have not fallen by as much as the reduction in wholesale costs, the reason is obviouly because of the threat that Labour will win the next election and freeze prices putting the suppliers at risk of bankruptcy if wholesale prices rise during the freeze period so they are maintaining margins now in order to have something in reserve. So Labour's energy 'promise' is directly leading to higher prices now. Thanks Ed and Ed.

System

I agree this is a none story being hyped by politicians, and sites such as this for commercial gain. If people cannot be bothered to switch, then short of making a law which requires them to do so, it is down to personal choice, and/or personal circumstances.

An important point to note is that if Company 'A' buys £100M of energy and wants to realise a 5% profit, then if everybody switched to the lowest tariff then the cost of these tariffs would go up for everyone buying energy.

Perhaps MSE CEC, which is not an OFGEM-accredited comparison site, could provide more help to those considering switching by eliminating TCR comparisons on its site and, as Martin Lewis suggested he would do last week, do away with mis-leading 'inflated savings' projections for people making comparisons when they are already on a fixed price tariff ending in less than 12 month's time.

dori2o

There needs to be a wholesale change in the gas/electricity market as a whole.

I consider myself to be relatively intelligent, I have good qualifications, and I can work easily with numbers, and yet I get confused when it comes to energy tariffs, when to switch, who to switch to, shuld I pay a standing charge or not etc etc. Now if I, a person who works with numbers/maths everyday and has done since I left school as a major part of the jobs I've done, get confused with the various tariffs, deals, bonuses etc then it must be extremely difficult for people who don't understand numbers or are not computer literate.

A few years ago I plotted out my energy use on a fortnightly basis for a whole year. I used this information to switch providers.

What I found was that the comparison sites don't always get it right.

What they often list as the cheapest/best deal can often be far more expensive than the comparison sites claim it to be. Obviously within the plotting of gas/electricity use there are a lot of factors that will change from year to year, i.e. how cold winter gets and how long it lasts, what kind of summer we have, whether we have a late autumn with warmer temperatures lasting well into early December as we had in 2014. But it is still a good reference to work from.

Despite the 'voluntary' agreement that the energy companies entered into to ensure that they advised you if there was a cheaper tariff available this only aplies to those people who are looking to switch. Those loyal customers who for whatever reason don't switch are then the nes who lose out hugely.

Things are not helped by the fact that at any one time just 1 of the energy companies can have several different tariffs available at the same time, and obviously they have various new deals which ofter offer teaser rates to get customers to switch to them. Often these rates only last for a short period of time and a lot of customers don't know this or frget abut is so end up on the standard variable rate.

Obviously it is those on the SVR who pay for those 'teaser' rates and low cost deals by not switching.

One way to reform the energy market IMO would be to restrict the number of tariffs a business can have for each type of meter.

At least that way they could guarantee to offer the best deals to the vast majority of their customers, even those who have remained loyal.

Obviously they should have the tariffs for vulnerable/over 60's etc etc, but other than that restrict them to only 2 other tariffs and whenever bills are issued the energy provider should be required to advise the customer as to which of their tariffs would be the best for them based on their annual consumption. It would then be down to the customer to decide whether they want to change tariff.

IMO that makes the market much fairer and much less complicated, and guarantees everyone is getting value for money.

VT82

One good thing about the article is that it doesn't use the word 'loyal' to describe customers who have been on the standard tariff for years (like the Sky News article I read this morning did). They are not doing it out of loyalty, they are doing it out of either laziness, ignorance, or incapacity, but never loyalty.

I did think this bit was funny though:
Meanwhile, it adds that information supplied by the big six firms shows the number of recorded complaints has increased fivefold from 2007 to 2013, mainly from problems related to billing, customer services and payments.

Ignoring the fact that this is probably down to increased recording of complaints, not just from increased complaints being made in the first place, how much of this is due to the increased level of switching, which is when problems are obviously most likely to occur?!?!

MillicentBystander

One of the (many!) appalling results of the privatisation of the energy industry is the rise of the switching site industry (I refuse to call them comparison sites). These people (and I DO include MSE in this although they aren't the worst by any means) are not in it for altruistic reasons; it's basically a money-making exercise. Which obviously adds to the bills of ALL energy users at the end of the day.

If Milliband was serious about curbing the excesses of the energy industry he should propose a Govt/Ofgem-run true comparison site that is non-profit making and not open to industry manipulation/marketing tricks. Easiest thing in the world for the Govt. to set up...

Sledgehead

dori2o wrote: »

There needs to be a wholesale change in the gas/electricity market as a whole.

I consider myself to be relatively intelligent, I have good qualifications, and I can work easily with numbers, and yet I get confused when it comes to energy tariffs, when to switch, who to switch to, shuld I pay a standing charge or not etc etc. Now if I, a person who works with numbers/maths everyday and has done since I left school as a major part of the jobs I've done, get confused with the various tariffs, deals, bonuses etc then it must be extremely difficult for people who don't understand numbers or are not computer literate.

Can we please for one second be honest about this issue. So you have discovered as I have that price comparison websites don't always give you the entirely optimal solution. So what? Presumably you are suggesting that elsewhere in life all of your other financial decisions are sheer perfection. So I take it you are sure that the ketchup you buy is absolutely the best value: you buy it from the optimal outlet, one that uses up the least petrol and time (taking into account other tasks you can perform whilst making said trip, having also factored in the ocado alternative); you have considered the health implications of your choice based on the latest medical and scientific research, having at some point been DNA profiled (a cost you also must choose to accept of take the consequences). Doubtless you have also considered the financial implication of the psychological benefits or otherwise of your brand choice. And of course you also need a cost benefit analysis of your cost benefit analysis - and one for that cost benefit analysis and so on...

No? Why then demand such perfection when purchasing gas? Martin says that a good price comparison will save you ~200 quid, a bad one a tenner less.

I hear a lot of people accusing the energy companies of bad practice or operating in a false market. Well here's my J'accuse moment for the day: i accuse YOU and all those like you (Ed Davey, Milliband etc) of malicious market distortion. Switching is EASY AND WORTHWHILE and it is YOU who make others think otherwise and therefore it is YOU who bear the sole responsibility for dissuading others from making the minuscule effort and taking the vanishingly small amount of time needed to do so. YOU ARE BREAKING THE MARKET, NOT THE ENERGY COMPANIES.

buzzyourboots

I recently used the energy club to move from co-operative energy to a new supplier. I was presented with a bill from the co-op for £540 outstanding. A combination of low standing orders and meter estimates apparently! Any advice welcome.

System

buzzyourboots wrote: »

I recently used the energy club to move from co-operative energy to a new supplier. I was presented with a bill from the co-op for £540 outstanding. A combination of low standing orders and meter estimates apparently! Any advice welcome.

Hi. This is probably not the best thread to use. Can I suggest that you open a separate thread for people to respond to your particular problem.

Sledgehead

MillicentBystander wrote: »

One of the (many!) appalling results of the privatisation of the energy industry is the rise of the switching site industry (I refuse to call them comparison sites). These people (and I DO include MSE in this although they aren't the worst by any means) are not in it for altruistic reasons; it's basically a money-making exercise. Which obviously adds to the bills of ALL energy users at the end of the day.

If Milliband was serious about curbing the excesses of the energy industry he should propose a Govt/Ofgem-run true comparison site that is non-profit making and not open to industry manipulation/marketing tricks. Easiest thing in the world for the Govt. to set up...

Economics 101 fail. Competition lowers prices, not government. The reason people don't switch is :

a ) because of people like you who claim the price comparison websites are out to rip customers off;

b ) because they really do not consider energy expensive. If they did, they'd soon be motivated to switch. Fact is people think 200 quid a piffling sum. Yep, they'll turn up to the sales to "save" 200 quid, but be honest: that is not about saving, it's about spending. People like sales, not because they like to save, but because they are consumerholics. And they moan about the price of essentials because it means less footie tickets and shoes, not because they want to put money aside for a rainy day.

And speaking of rainy days, we could have fatter pensions if it weren't for our obsession with bashing our home grown companies and instead wasting that money inflating the price our kids have to pay for housing.

As for a lack of competition. Yep, there is a massive lack. The big two have had it their way for far two long. The market is broken, as evidenced not just by people not switching, but by not voting at all. BREAK UP THE BIG TWO! (labour and conservatives).