Competition and Markets Authority Review

Legacy_user

This summary is an interesting read. One of the most telling statistics for me is that 70% of Big 6 customers are still on a supplier's standard/variable tariff. Also this modest survey, caught my eye:

We commissioned a survey of 7,000 domestic retail energy customers. The survey provides material evidence of domestic customers’ lack of understanding of, and engagement in, retail energy markets. For example:

(a) 36% of respondents either did not think it was possible or did not know if it was possible to change one (or more) of the following: tariff, payment method and supplier;

(b) 34% of respondents said they had never considered switching supplier;

(c) 56% of respondents said they had never switched supplier, did not know it was possible or did not know if they had done so; and

(d) 72% said they had never switched tariff with an existing supplier, did not know it was possible, or did not know if they had done so.

https://assets.digital.cabinet-office.gov.uk/media/559ad883e5274a155c00001b/EMI_PFs_Summary.pdf

The 'elephant in the room' here is that if the 70% on SV tariffs who allegedly are being over-charged are switched to a lower charging tariff - either through education or regulation - then the existing 30% of customers on cheaper tariffs will end up paying more.

There is also passing references in the document to smart meters and energy use at reduced cost in off-peak periods

joncombe

Hengus wrote: »

There is also passing references in the document to smart meters and energy use at reduced cost in off-peak periods

Or more likely, higher costs at peak times.

Smiley_Dan

I the government made energy efficiency a national infrastructure concern and rolled out some real improvements then *everyone* would benefit, we wouldn't need enquiry after enquiry, we wouldn't really need to do comparison shopping either!

Still, that wouldn't keep these self appointed armchair generals in jobs would it?

And the energy companies would be hit hard. My heart bleeds.

modsandmockers

Hengus wrote: »

One of the most telling statistics for me is that 70% of Big 6 customers are still on a supplier's standard/variable tariff

Sometimes it’s hard to believe that the people who try to discuss these issues on the meeja are not themselves included in the 70%. The guy on R4 Today this morning was waffling on about the 4-tariff rule acting as a brake on the energy suppliers’ freedom to offer their customers a more attractive range of ‘products’. What? There are only two products available - one is called Gas and the other is called Electricity. The ‘product’ is exactly the same whoever you buy it from, the delivery service rarely fails, and nobody gives it a lot of thought.

The phone companies, on the other hand, have an ever-changing variety of sexy hardware and software with which to tempt their customers, and are in a position to wrap up their deals with internet access. The competition is fierce, and people pay attention!

The energy companies won’t even tell you what their prices are unless you force them to.

Bark01

modsandmockers wrote: »

The energy companies won’t even tell you what their prices are unless you force them to.

All prices are available on each suppliers websites with the minimum of fuss. Its a regulated requirement. the minimum requiremnt is for the user to enter a postcode.

BG - http://www.britishgas.co.uk/content/britishgas/products-and-services/gas-and-electricity/our-energy-tariffs/compare-energy-tariffs.html

SSE - http://www.sse.co.uk/OurPrices/

Npower - https://www.npower.com/at_home/applications/product_comparison/tariff.aspx/tariffratesandchargeslookup

Scottish power - https://www.scottishpower.co.uk/tariff-information.process?execution=e2s1

EDF - https://my.edfenergy.com/gas-electricity/tariff-information-labels

E.On - https://www.eonenergy.com/for-your-home/help-and-support/search-tariff-information

*Links were copied from a post I made in 2014 so they might have changed.

modsandmockers wrote: »

There are only two products available - one is called Gas and the other is called Electricity. The ‘product’ is exactly the same whoever you buy it from

The end product is the same but the costs are different, dependant on who you buy it from and how they have hedged each particular product. You aren't really helping this debate.

modsandmockers

Bark01 wrote: »

All prices are available on each suppliers websites with the minimum of fuss

It's the 'minimum of fuss' bit I would disagree with. It's easy to get an annual saving figure (of extremely dubious value), but if you want to know the prices, you have to drill deeper. And that's where the 70% are likely to give up the struggle.

modsandmockers

Bark01 wrote: »

The end product is the same but the costs are different, dependant on who you buy it from and how they have hedged each particular product. You aren't really helping this debate

I have made the point before that the so-called energy 'suppliers' are actually no more than commodity speculators, and the game of 'switching' is their way of forcing their customers to join them.

Bark01

modsandmockers wrote: »

I have made the point before that the so-called energy 'suppliers' are actually no more than commodity speculators, and the game of 'switching' is their way of forcing their customers to join them.

What alternative are you suggesting? Everyone pay a higher rate to account for energy risk?

Someone has to hedge in order to smooth out the costs.

keiran

I wonder if this review looked into the role of the exceptionally poor service offered by the "independent" Energy Ombudsman?

modsandmockers

Bark01 wrote: »

What alternative are you suggesting? Everyone pay a higher rate to account for energy risk?

According to the report, 70% of customers appear to be doing exactly that - which is exactly the way the energy suppliers like it

Someone has to hedge in order to smooth out the costs

Yes, but I don't understand why the complications of hedging should be passed onto the consumer under the pretence that it is freedom of choice.

Another aspect of the 70%/30% division is that the profitable 70% almost certainly makes comparatively little use of Customer Services. It is not beyond the realms of possibility that the energy 'suppliers' deliberately offer a poor level of customer support in the hope that more of the 30% will give up the struggle and migrate to their Standard Variable tariff.

Bark01

modsandmockers wrote: »

According to the report, 70% of customers appear to be doing exactly that - which is exactly the way the energy suppliers like it

No argument there, but what's stopping them switching? Front page right hand column of every bill shows how much they can save, all they have to do is ring CS or go on-line.

If they go to a broker site all they need to do is answer 5 questions, the answers to which are either personal choice or displayed on the 2nd page of the bill in the right hand column. Once I've shown this to people htey have no problem in swithcing and can't believe its so easy.

And yes I know a small % of people can't use on-line or are stuck on PPM, but we are talking about the majority.

Apathy is major problem for consumers, why would suppliers care about this, as you say its not in their interest to increase switching? The media certainly shout about the issue of sticky customers but then have no interest in actually trying to increase engagement and their in lies the problem. Other countries don't have such high levels of apathy.

https://en.wikipedia.org/wiki/Folk_devil

modsandmockers wrote: »

Yes, but I don't understand why the complications of hedging should be passed onto the consumer under the pretence that it is freedom of choice.
.

How would you like it passed on to customers? A single tariff! Nationalised prices won't be any cheaper.

At least this way we get a choice, those of us who want to be engaged can switch tariffs with relative ease and receive cheaper prices as a result. My supplier lets me change tariff with a click of a button all I have to do is log in, takes 2 minutes. As the markets been falling for sometime I just check every 6 months or so and change.