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MSE News: Energy customers 'pay too much'
Former_MSE_Helen
Former MSE 2.4K Posts
in Energy
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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Energy customers 'pay too much'
Click reply below to discuss. If you haven’t already, join the forum to reply. If you aren’t sure how it all works, read our New to Forum? Intro Guide.
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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.
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.
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.
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.
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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?!?!
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...
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.
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.
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).