Warning over new gas & electricity contracts

worldtraveller

Some new gas and electricity contracts are starting to lock-in customers to a one year deal, inhibiting their ability to switch suppliers.

In August, regulator Ofgem abolished the rule under which all customers could switch suppliers with just 28 days notice.

Now a small energy company Utilita and British Gas are both offering a deal that ties in customers for a year.

BBC News - Business

bristolleedsfan

worldtraveller wrote: »

Some new gas and electricity contracts are starting to lock-in customers to a one year deal, inhibiting their ability to switch suppliers.

In August, regulator Ofgem abolished the rule under which all customers could switch suppliers with just 28 days notice.

Now a small energy company Utilita and British Gas are both offering a deal that ties in customers for a year.

BBC News - Business

http://forums.moneysavingexpert.com/showthread.html?t=541267

Cardew

Well in my opinion this was inevitable, and is to be welcomed.

The culprits in the main are the comparison networks that have actively encouraged us to switch companies to earn themselves commission. The financial advantages of switching are frequently misleading and one needs to be quite an expert to understand that the savings will not be those claimed by the sites. Obfuscation rules!

It takes considerable clerical effort, and hence money, for the Utility companies to close one account and another be opened.

The costs of the clerical effort above, and the comparison website’s inducements of cashback, ‘free’ champagne as well as money back from Quidco etc is all paid for by us, the consumer, in higher bills.

The Comparison websites are simply parasitic organisations, and let us hope that this overdue ruling puts a nail in their coffin.

Stand by from howls of protest, and a huge publicity campaign from the comparison sites – all disingenuously arguing it is bad for the consumer.

Well done OFGEM!

Ken68

If there wasn't so many tariffs, there would be no need for a comparison service. I use them, otherwise the alternative would be hours checking each provider.
And as each move to another provider will be cheaper bills, PLUS cashback, I can't lose.
The driving force behind the comparison sites are the energy providers.
OFGEM should sort out the misleading tariffs, heavy fines.
They could have brought in unit pricing as with foodstuffs in supermarkets but have chosen to give in to BG PG and so on.

bristolleedsfan

Cardew wrote: »

Well in my opinion this was inevitable, and is to be welcomed.

The culprits in the main are the comparison networks that have actively encouraged us to switch companies to earn themselves commission. The financial advantages of switching are frequently misleading and one needs to be quite an expert to understand that the savings will not be those claimed by the sites. Obfuscation rules!

It takes considerable clerical effort, and hence money, for the Utility companies to close one account and another be opened.

The costs of the clerical effort above, and the comparison website’s inducements of cashback, ‘free’ champagne as well as money back from Quidco etc is all paid for by us, the consumer, in higher bills.

The Comparison websites are simply parasitic organisations, and let us hope that this overdue ruling puts a nail in their coffin.

Stand by from howls of protest, and a huge publicity campaign from the comparison sites – all disingenuously arguing it is bad for the consumer.

Well done OFGEM!

seems to have slipped your mind that it is the energy companies that are paying for the switching incentives that the comparison sites are offering.

yearly contracts = less people able to switch = energy companies offering higher switching incentives to lure those who are able to switch.

Cardew

bristolleedsfan wrote: »

seems to have slipped your mind that it is the energy companies that are paying for the switching incentives that the comparison sites are offering.

yearly contracts = less people able to switch = energy companies offering higher switching incentives to lure those who are able to switch.

Slipped my mind???

Of course it is the energy companies that are paying the incentives to the customers, and the commission to the comparison sites and the expenses for all the clerical effort involved in the frequent changes of account.

Who do you think eventually foots the bill for all that lot? Us - the customers of course!

What other source of income do you feel the comparison sites have, other than commission from the utility companies? That's why they have already started squealing.

Ken68

An advertising campaign , say, by British Gas would generate some new business but a comparison site recommendation would also gain a few customers and with cheaper bills, so you could say that Energyhelpline, Uswitch et al are driving prices down.

Cardew

Ken68 wrote: »

An advertising campaign , say, by British Gas would generate some new business but a comparison site recommendation would also gain a few customers and with cheaper bills, so you could say that Energyhelpline, Uswitch et al are driving prices down.

Ken,
I am the first to admit that the comparison websites did a good job in making people aware of cheaper options and certainly had the effect of driving prices down; note I used the past tense!

However they have now simply become parasitic and are an unneccessary expense; using every ruse possible to persuade people to switch in order to maximise their commission.

Unrealistic DD quotations, excluding firms like Ebico(when they were competitive) because they didn't pay commission etc etc. One company even offered BG a deal(refused) to increase their market share by presenting them in a more favourable light.

It is not people like yourself who understand utility tariffs who get duped. However Mr & Mrs Average who do not understand tariffs simply accept incorrect information given to them and many have moved to more expensive/inappropriate tariffs as a result of that information.

Ken68

Yes Cardew, I agree. Seems like users have to double check first before committing to the change.
Another job for Ofgem/Energywatch to sort.
Grants need a good shakeup too.

Cardew

Ken68 wrote: »

Yes Cardew, I agree. Seems like users have to double check first before committing to the change.
Another job for Ofgem/Energywatch to sort.
Grants need a good shakeup too.

I believe that this is ofgem's first attempt to curb the excesses of the comparison sites.

I can't understand why we don't have one Government sponsored 'comparison website' (run by, say, the Energy Saving Trust)with all of the tariffs on their database and thus give impartial information to consumers without the motivation to 'slant' the results.

A_Nice_Englishman

Couldn't agree more with you Cardew. I have been saying for ages that the commission paid to sales people (whether employed by energy companies or independent) and salaries of the administrators who deal with the switches can only result in prices being higher than they need be.

I like the idea of a non profit making comparison service too.