Misleading quote?

bongosshadow

On Friday 15th July 2016 I used a number of the price comparison sites which are accredited with the Ofgem confidence code to do a price comparison on my gas and electric. The comparison sites I used were: ukpower, quotezone, myutilitygenius, runpathdigital, energylinx, uswitch, switchgasandelectric, unravelit, moneysupermarket, energyhelpline and simplyswitch. All of the sites gave the same result for the cheapest tariff, which was: ‘The Co-operative Energy – Co-op Fix for Longer September 2017’ tariff, and all of the sites except for one gave an average saving of around £335 per year for this tariff. However, the unravelit site stated that switching to the same tariff would give a saving of £558.80 per year. How is this possible?

Cardew

You don't give your current tariff/supplier.

I suggest you ignore £savings, and just compare the cost of xx kWh gas and yy kWh. Is the 'unravelit' quote £223 less than the others?

System

Welcome to the forum. Ofgem's savings mythology (edit: I meant methodology but it could be argued that they are one and the same) confuses another consumer.

I assume that you are coming to the end of a fixed term contract. Ofgem mandates that future costs are calculated as follows:

Let us assume that you have 1 month left on your present tariff. So the costs for your next 12 months will be 1 month on present tariff PLUS 11 months on your supplier's standard variable tariff.

This leads to inflated costs. You then select the 'Cheapest Energy Fix Ever' tariff at £X for the next 12 months. Your savings then are the Inflated Cost figure MINUS £X.

The best comparison is what you pay now for 12 months and what you would pay on the new tariff. MSE CEC provides this comparison as well as the Ofgem method.

I would urge all MSErs to contact consumeraffairs@ofgem.gov.uk and complain about these misleading savings.

From The EnergyShop submission to the CMA:

Our latest research published in March 2016 (copy attached) shows a more disturbing situation. In the scenarios studied in our latest research we found the following;

• In one scenario an actual saving of £197 was quoted, on average, as £536. This is £340 (173%) more than the customer will actually save.

• In the other scenario, an actual saving of £6.35 was quoted as £492. This is £486 (7646%) more than the customer will save.

• In one scenario all sites quoted a saving that was greater than the customer’s current energy bill. Clearly an implausible and absurd situation.

• Some sites showed savings that were over 8000% more than was achievable.

Edit: I have just looked at Unravelit and found that my savings are inflated. The reason being is that the site doesn't list the correct electricity tariff that I am on. In fact, it isn't listed at all.

Bark01

The prescribed methodology that caused this issue is being scrapped by CMA.

There is a current license condition that prescribes in great detail how a projection must be calculated. This license condition is being removed and replaced with an overarching statement that will by its nature be open to interpretation.

The deadline for implementing CMA recommendations is 23rd December 2016.

It doesn't mean that suppliers/brokers won't carry on using the projection methodology (it will cost them to revert systems back to old methodologies after all) but there will hopefully be some flexibility so the above points can be avoided.

System

Bark01 wrote: »

The prescribed methodology that caused this issue is being scrapped by CMA.

There is a current license condition that prescribes in great detail how a projection must be calculated. This license condition is being removed and replaced with an overarching statement that will by its nature be open to interpretation.

The deadline for implementing CMA recommendations is 23rd December 2016.

It doesn't mean that suppliers/brokers won't carry on using the projection methodology (it will cost them to revert systems back to old methodologies after all) but there will hopefully be some flexibility so the above points can be avoided.

The above rather conflicts with the response that I got from OFGEM last week. I need to look at the CMA Fjnal Report again.

Bark01

Hengus wrote: »

The above rather conflicts with the response that I got from OFGEM last week. I need to look at the CMA Fjnal Report again.

I don't think there is a direct reference to this in the CMA paper, but Ofgem have recognised that a PP won't work when the RMR Simpler rules are relaxed (which they already have been)

Multi-tier tariffs, tariffs with a duration of less than a year or discounts and bundles that are not related to consumption or which are ‘one-off’ payments have the potential to provide significant challenges to the PP methodology.

OFGEM have proposed to Remove PP, TCR and CTM in its current form and amend the TIL. These will be replaced by the introduce a new principle(s) to cover quotations/projections.

System

Bark01 wrote: »

I don't think there is a direct reference to this in the CMA paper, but Ofgem have recognised that a PP won't work when the RMR Simpler rules are relaxed

I am not sure that they understand the issue if this extract from their ongoing consultation is anything to go by:

Looking forward...

• Personal projection:

• The personal projection references could be removed and the pre-2015 Confidence Code content which lists factors sites should include and exclude in their calculations (ie certain discounts) could be re-instated.

• NEW: Potential to introduce an additional requirement to ensure that sites apply the same methodology across all suppliers within their site (ensure consistency within site).

• TIL: the Confidence Code could be unchanged, with sites required to display any amended TIL format.