Deceptive tariff comparison by British Gas

nigelbb

My fixed tariff with British Gas (Energy and Home Services Jun 2021v2) ends 30th June & I just received a renewal email suggesting switch now to a new fixed tariff (Exclusive Fix Oct 2022v2). There is a price comparison showing the annual cost of the two tariffs as almost identical (ignoring the fact that my current tariff includes Home Care cover worth £150 per year). At first glance I was surprised to see that apparently my fuel costs for the next 18 months would be similar to the past year & could have been tempted to click on the "Switch now" button in the email. Then I realised that it was all a con & the real difference was £777 vs £1033.

When my current tariff ends if I do nothing I would be switched to the standard variable tariff & the proposed new tariff is much more expensive. The comparison between old & new tariffs is shown further on in the email but the old tariff is not the one used to calculate the annual cost in the headline figures.

Energy and Home Services Jun 2021v2

Gas - Standing charge: 12.935p/day Unit rate: 2.383p/kWh

Electricity - Standing charge: 16.292p/day Unit rate: 14.312p/kWh

Exclusive Fix Oct 2022v2

Gas - Standing charge: 14.667p/day Unit rate: 3.423p/kWh

Electricity - Standing charge: 19.571p/day Unit rate: 18.137p/kWh

When you receive a renewal notification for car insurance the company is obliged to show along with the renewal cost the price of the premium you paid a year ago. It would be a much fairer comparison to show what I paid for energy under the old tariff not the standard variable tariff labelled as the old tariff.

It's particularly sneaky to attempt to entice you to switch to a new tariff 33% more expensive before the current fix ends.

daveyjp

Nothing to do with British Gas, they are simply following the process set out in the regulations.

What you are paying in a current fixed tarriff is irrelevant as come 30 June that deal will end.  All you need to know is which company will be cheapest from 1 July, use comparison sites and enter your actual use over the last year for prices.

[Deleted User]

daveyjp said:

Nothing to do with British Gas, they are simply following the process set out in the regulations.

What you are paying in a current fixed tarriff is irrelevant as come 30 June that deal will end.  All you need to know is which company will be cheapest from 1 July, use comparison sites and enter your actual use over the last year for prices.

Absolutely right. Ofgem requires suppliers and PCWs to use a rolling 12 month cost going forward for tariff comparisons. If you have one month left on your present tariff, then the 12 month cost going forward will be one month on the present tariff and 11 months on the supplier’s SVT. The problem that Ofgem has is that some form of assumption has to be made. The present assumption suits its purpose as it is 100% accurate for consumers who have never switched. Yes, for switching savvy consumers this can result in a new tariff that costs more but one that suggests that there will be a saving.

Hasbeen

BG have sent you a link to switch now. It is not deceptive. They are following set industry regulations.

Which you can use to switch now, or just before your existing tariff ends? But the tariff they are offering now might be gone by that time.

Do not concern yourself on what the difference is on your old tariff which would not exist, and concentrate instead on what is on the market at that time.

Use sites such as Switch with Which or the CAB switch site for a full comparison of what would be available.

nigelbb

Thanks for “grandmother sucking eggs” advice. I am perfectly aware that I can get a better deal that’s how I became a customer of British Gas in the first plane by switching from EDF for a better deal.

My point is that the naive customer could be deceived by this email into firstly assuming the annual cost of the proposed new tariff is almost identical to the old when in fact it’s 33% more expensive & even more expensive if duped into switching before the current fix ends.

Car insurance renewal is a good comparison. Renewal letters are obliged to include details of the previous year’s premium along with the renewal premium plus must tell customers that they may find a better deal by shopping around with other companies . There is no mention in the email I received that there is even the possibility of switching to another cheaper supplier.

It would be a simple matter for OFGEM to mandate similar information is conveyed in an energy supplier renewal proposal. 

JJ_Egan

I hope you will contact OFCOM  .

Reed_Richards

The whole business of switching or not is mired in difficulty for a naive customer.  There are plenty of posts here from people who believed their Direct Debit was somehow an all-you-can-eat thing rather than payments that would in due course be influenced by actual consumption.  Then they get aggrieved when they find themselves in arrears.   

Chino

Reed_Richards said:

There are plenty of posts here from people who believed their Direct Debit was somehow an all-you-can-eat thing rather than payments that would in due course be influenced by actual consumption.

Quote one such example.
Whilst there are certainly posts from people who compare the levels of their direct debits, I don't think there any from people assuming that a month's direct debit totally covers the cost of that month's energy consumption.

Reed_Richards

Chino said:

Reed_Richards said:

There are plenty of posts here from people who believed their Direct Debit was somehow an all-you-can-eat thing rather than payments that would in due course be influenced by actual consumption.

Quote one such example.
Whilst there are certainly posts from people who compare the levels of their direct debits, I don't think there any from people assuming that a month's direct debit totally covers the cost of that month's energy consumption.

https://forums.moneysavingexpert.com/discussion/6262017/1000-bill-from-avro-didnt-expect/p1 is the most recent one I could find.  I'll concede that the person who started this thread was possibly being more inattentive than naive, but a bit naive all the same.

[Deleted User]

nigelbb said:

Thanks for “grandmother sucking eggs” advice. I am perfectly aware that I can get a better deal that’s how I became a customer of British Gas in the first plane by switching from EDF for a better deal.

My point is that the naive customer could be deceived by this email into firstly assuming the annual cost of the proposed new tariff is almost identical to the old when in fact it’s 33% more expensive & even more expensive if duped into switching before the current fix ends.

Car insurance renewal is a good comparison. Renewal letters are obliged to include details of the previous year’s premium along with the renewal premium plus must tell customers that they may find a better deal by shopping around with other companies . There is no mention in the email I received that there is even the possibility of switching to another cheaper supplier.

It would be a simple matter for OFCOM to mandate similar information is conveyed in an energy supplier renewal proposal. 

I agree that it can appear misleading which is why the Cheap Energy Club allows users to use a 'present tariff now compared to new tariff comparison'. If you decide to complain to Ofgem, then you will get a polite but non-committal reply. If, in the future, Ofgem decides that a change is warranted, it will probably go out for a year long consultation with suppliers; PCWs and other interested parties before any changes are made.

All that said, the smart meter revolution is here. BEIS has recently paid the private sector £400K to develop a new price comparison App which includes demand shift so that consumers can compare smart time-of-use tariffs. Third-party apps are already available as well.  Comparisons going forward will be made on your actual cost/usage/time of use comparing the past pattern of consumption against the tariffs that are available on the market. As most people will have little idea how much of their demand they can shift to cheaper periods, this will be a bit of a challenge. I now have nearly 2 years of actual time-of-use smart meter data: it is possible to shift usage more than most people might imagine.

Tallerdave

nigelbb said:

It would be a simple matter for OFCOM to mandate similar information is conveyed in an energy supplier renewal proposal. 

Ofcom (Office for Coronavirus Obeyance in Mainstream media) are only interested in broadcasters who aren't playing along with Project Fear.