Martin Lewis – Warning: Energy price comparison savings are WRONG due to the price cap – and how...

MSE_Eesha
MSE_Eesha Posts: 162 MSE Staff
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This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.


Read Martin's "Martin Lewis – Warning: Energy price comparison savings are WRONG due to the price cap – and how it needs to be fixed" Blog.


Please click 'post reply' to discuss below.

Comments

  • VT82
    VT82 Posts: 1,079 Forumite
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    As long as it's only risking the 'your saving versus doing nothing' figure being wrong, not the 'expected amount you'll pay' figure being wrong, it doesn't feel like that big a deal to me?


    In terms of the issue around disincentivising people from switching by under-reporting possible savings - I think by the time people are on a comparison website, they are very unlikely to be people staying on an SVR (including the new cap).
  • Anthorn
    Anthorn Posts: 4,362 Forumite
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    So ... er ... in a nutshell ... Martin wants energy firms to publish their prices inclusive of the cap because comparison sites are unable to do it. Personally, I think that's reasonable because energy firms must know it in order to charge for it.

    I don't agree with the previous post by VT82:
    I think by the time people are on a comparison website, they are very unlikely to be people staying on an SVR (including the new cap).
    Standard variable rates are part of comparisons at this time and if a SVR inclusive of the cap is cheaper than the latest super-duper, ultra-cheap tariff then people are likely to go with the SVR.

    I agree with Martin but I think his letters and therefore the article we are commenting on obfuscates an already obfuscated subject.
  • One-Eye
    One-Eye Posts: 66,435 Forumite
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    Martin seems to be solely worried about the inability to estimate a customer's costs over the next year if they are on a capped SVR. If the potential switcher moves to a fixed rate deal then the "other side" of the comparison is known accurately, but if the customer is moving to a variable tariff, then this can't be calculated accurately either, as this might increase 4 times over the next year (hello Outfox The Market). You shouldn't take into account future increases on one side of the equation and ignore them on the other.

    The "what you will pay on your current deal" shown on the comparison sites is often a load of garbage anyway. I have been on various fixed tariffs for many years. About two months before the end of a fix I start looking for a new deal, but all the comparison sites show me new deals and compare it to paying the fix for another 2 months and the SVR for 10 months. This can show me that deal X is £1200 for the year and "saves" me an amazing £300. This is irrelevant when I will actually be paying £120 per year more than I am paying now!!

    If it was a TV that was for sale, the shop would be in serious trouble having a price tag that said SALE [STRIKE]£1500[/STRIKE] - now £1200 SAVE £300 when they were previously selling it at £1080, but this is what the comparison sites do with energy prices.
  • FestiveJoy
    FestiveJoy Posts: 229 Forumite
    One-Eye wrote: »
    Martin seems to be solely worried about the inability to estimate a customer's costs over the next year if they are on a capped SVR. If the potential switcher moves to a fixed rate deal then the "other side" of the comparison is known accurately, but if the customer is moving to a variable tariff, then this can't be calculated accurately either, as this might increase 4 times over the next year (hello Outfox The Market). You shouldn't take into account future increases on one side of the equation and ignore them on the other.
    But you are missing he fact that SVR tariffs will be capped ;)
    That is what MSE is referring to (and not currently being considered)
    One-Eye wrote: »
    The "what you will pay on your current deal" shown on the comparison sites is often a load of garbage anyway. I have been on various fixed tariffs for many years. About two months before the end of a fix I start looking for a new deal, but all the comparison sites show me new deals and compare it to paying the fix for another 2 months and the SVR for 10 months. This can show me that deal X is £1200 for the year and "saves" me an amazing £300. This is irrelevant when I will actually be paying £120 per year more than I am paying now!!

    But your suggestiion that you will pay £120 more is against a non-existant price; the price you currently pay will no longer be available to you in 2 months time.
    One-Eye wrote: »
    If it was a TV that was for sale, the shop would be in serious trouble having a price tag that said SALE [STRIKE]£1500[/STRIKE] - now £1200 SAVE £300 when they were previously selling it at £1080, but this is what the comparison sites do with energy prices.

    With due respect, not a good analogy.

    A better analogy would be
    AFTER EVENT PRICE £1500 - now £1200 SAVE £300

    No shop would get into trouble for doing that :)
    (as long as the item will genuinely be on offer for sale after the event at £1500)

    :xmassign::xmastree::xmastree:
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