Did anyone else listen to this radio programme?

rollon65

Here is a copy of a letter that I sent to Ofgem, a few days ago.
Did anyone else listen to this program and have the same reaction as I did?

Dear Sirs,

I am appalled at the deception as to the amounts of cash savings made when switching energy supplier, as broadcast on tonight's BBC Radio 4 "Moneybox" programme.
How much more pointless can it be NOT to use the entire historical 12 months spend with an existing supplier and then compare it with 12 months forward projection with a new supplier?
However, no - according to "Moneybox", we are told that (in my case, I had been with ExtraEnergy for about 11 months on their "Fresh Fixed Price Nov 2016 v3" deal), suppliers are instructed accordingly by your office to use the value of just my one remaining month of my preferential deal and add to that the cost of 11 months at ExtraEnergy's forward looking Standard Tariff!
This is absolutely ludicrous! No wonder I was advised by my new supplier, EDF, that I could save £302 per annum, if they were comparing your afore-mentioned formula, with a forward projection of the cost of 12 months on their "Simply Fixed October 2017v2" deal! To use ELEVEN MONTHS of hypothetical costs that would never have been incurred by me, to produce such an inappropriate comparison is beyond me!
I never accept a Standard Tariff from any energy supplier!
This situation might explain why, over the last 5 years or so, I have never made any real terms cash saving at all.

What typically happens is that my monthly direct debit, based on my previous years energy consumption uptake, starts off at quite a reassuring £5 or £6 under what it was the previous year until, six or nine months into my contract my monthly payment shoots up by £8 or so.
Please, please, can somebody patiently explain to me how an organisation such as yourselves, that is supposed to promote the consumer's interests, promotes this totally misleading formula was ever put into practice? It is nothing less than dishonest.

Someone - please tell me that I have misunderstood the gist of the program . . .

Ectophile

I think you've pretty well understood it. I wonder how many other people signing up to apparently great savings are realising that they won't save anything at all by switching to another fixed-price deal mid-contract.

rollon65

Thank you Ectophile!
This, surely is BIG! We're all being grossly mislead. I read about it in an article in the Mail about a week ago and the following day it was on the radio as I have said.
I have just watched Martyn's programme on TV and not one word about that particular issue.
All the participants were laughing themselves silly about each saving several hundred pounds.
My direct debit with extraenergy was on average £74 (because for the first quarter it was £68, then it was £74 for the middle two quarters, followed by a further uplift to £76 for the final quarter).
My direct debit with edf is initially set at £61, which is a reduction (a saving, can only be what the outcome is at the end of your deal!) of £13 per month, or £156 per annum, depending on whether or not I get any increases along the way.
That's £156 per annum - not to be sneezed at in any way, but £302 it is not!

Cardew

Rollon65

Your point has been covered many times.

I believe for some years this has been an Ofgem directive to forecast a future annual spend anticipating the customer will move to a standard tariff at the end of their fixed term. I know I complained about this some years ago.

The answer is that comparison networks must have an alternative method of enabling the customer to compare future charges against their historical charges. I mainly use energyhelpline and although the default position is as you describe(reverting to a standard tariff) you can compare against 12 months on your current tariff. - That said it takes us 'anoraks' to understand the implications.

The problem we are up against is that the comparison websites exist to get customers to switch energy supplier - perhaps understandably not provide a service to consumers - that is how a multi-million(billion?) industry has developed in a relatively short time. Even WHICH, the consumer's champion, has got in on the act. So they are very happy with a situation that exaggerates savings.

It would be perfectly feasible to have a single Government sponsored comparison website run by, say, the Energy Saving Trust, that would have no financial interest in misleading customers.

rollon65

Hello Cardew,

Many thanks for your enlightenment, I guess my cursory glance around the forum failed to pick that up.
I take it then that had I accepted ExtraEnergy's best follow-on offer, the same outcome would have occurred as a result of them doing the same thing, even though they were in a position to know exactly what my previous annual spend was?
I shall wait to see what Ofgem has to say about my gripe.

Cardew

Hi,
I guess all the comparison websites will protest mightily if Ofgem does the sensible thing and issues a directive that the 'default' saving figure should be based on 12 months on the customer's current charges.

Obviously, for those on a good fixed tariff, and in these days of rising prices, it will probably mean that the best tariff on offer might be £xx more per year; but at least the unwary won't be fooled into thinking they are going to make a saving.

System

This submission was put before Ministers and the CMA. Ofgem, and the then DECC, would have no truck with those of us who wanted to see change because it suits the Govt's aim of encouraging more people to switch. The calculated savings are only incorrect for consumers on fixed term tariffs with less than 12 months to run.

https://assets.publishing.service.gov.uk/media/54da24ebed915d514400000b/The_Energy_Shop_Submission.pdf

rollon65

". . . the unwary won't be fooled into thinking they are going to make a saving"
This is the real issue Cardew, isn't it? I count myself amongthe reasonably energy savvy, but the way the "Ooooo's and Wooop's went up on The Martin Lewis Money Show, it was just like the "saviour" had performed an amazing miracle, right in front of their eyes.
I really do think that Martin ought to feel some kind of obligation to bring this to the attention of his adoring masses!
Thank you Hengus. I have downloaded the document that you posted the to and will browse it shortly.
Confronted with a potential saving of £302 per annum and with the three "auction" schemes that I had signed up to, coming up with less (one even said that the saving they could offer me was "+£14!!!), I was keen to switch, as savings were starting to decrease. With just 1 month to run of my contract, I was within the 49 days that would see me free of paying exit fees and so I jumped into the arms of Edf.

[Deleted User]

When I switch suppliers I have no interest whatsoever in savings comparisons or TCRs, all I want is the unit rate and standing charge. I then put them into my spreadsheet and calculate the actual savings against my existing tariff using my actual fuel consumption history. I don't understand why anyone would do anything else.

[Deleted User]

rollon65 wrote: »

the way the "Ooooo's and Wooop's went up on The Martin Lewis Money Show, it was just like the "saviour" had performed an amazing miracle, right in front of their eyes.

What the TV shows never do is explain that the only people who make the really big savings are the ones who have never switched before. If you switch regularly the savings are usually peanuts, and switching is more about preventing your bill from starting to creep back up again.

Cardew

jack_pott wrote: »

When I switch suppliers I have no interest whatsoever in savings comparisons or TCRs, all I want is the unit rate and standing charge. I then put them into my spreadsheet and calculate the actual savings against my existing tariff using my actual fuel consumption history. I don't understand why anyone would do anything else.

Err whot is a standing charge and a unit rate - and I ain't good at multipleksion