Plan for simple energy tariffs ‘too complex’

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PLANS by the UK government to simplify energy tariffs are still too complex to allow consumers to find the cheapest deal, according to a watchdog.

Which? said a survey found just three in ten people (28 per cent) correctly chose the right answer when asked to identify the cheapest deal using Ofgem’s tariff comparison rate (TCR) proposal.

The consumer group is recommending that tariffs are presented in the style of a petrol forecourt display using single unit prices, claiming that 84 per cent of those surveyed picked the cheapest deal using such a format.

Two thirds of people (65 per cent) said they preferred the single unit price model compared with 10 per cent who preferred the TCR.

Consumers also scored the single unit format highly for ease of understanding (62 per cent), speed of use (63 per cent) and helpfulness (53 per cent), Which? said.

The TCR aims to allow consumers easily to compare the price of tariffs across the market, giving them an indication of the cheapest deal based on an assumption of medium usage of both gas and electricity.

However, just 4 per cent of those who viewed the TCR told Which? that they would check their usage to make sure they had made the right choice, while 57 per cent were not even able to find their energy bill.

More than half of those surveyed (55 per cent) had never compared their energy tariff with others on the market to check if it was worth switching, with just a quarter (24 per cent) switching suppliers in the last two years.

Which? executive director Richard Lloyd said: “Energy prices are the biggest worry for consumers but Ofgem’s current proposals will fail to help people find the best deal and could leave millions paying over the odds.

“You shouldn’t need a maths degree to work out the cheapest energy deal but the complexity of energy pricing makes it virtually impossible for most people to make sense of the market.

“Our research shows overwhelmingly that people find it easier to spot the cheapest deal for them when prices
are presented clearly, simply and consistently – just like on the petrol station forecourt.”

Energy UK chief executive Angela Knight said: “Which?’s proposal for a single unit tariff sounds simple but it’s not what it says on the tin. For example, high energy users like working families with children would end up subsidising low energy users like second home owners.”

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Richard Lloyd: Need for simpler and fairer energy tariffs

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