Consumers bewildered by energy deals

An investigation by the Which? consumer watchdog group found only one in ten people could identify the cheapest deal when presented with a range of standard energy tariffs. But when shown the tariffs in a simpler form, in the style of petrol forecourt displays, the number shot up to nine out of ten.

The report is published today and follows the announcement on Friday that at least two of Britain’s biggest energy companies are bringing in substantial price rises for gas and electricity.

Last week, British Gas announced an extra £80 on its typical annual dual fuel bill, with an average increase of  6 per cent affecting 8.5 million customers from 16 November.

Npower followed with an average rise of 8.8 per cent for gas and 9.1 per cent for electricity. Both companies blamed rising costs largely outside their control.

Most energy suppliers say they have simplified energy tariffs in the past year, but the findings by Which? reveal the vast majority of consumers are still baffled.

Only 8 per cent of people asked in the investigation could identify the cheapest deal out of the six leading suppliers’ standard electricity tariffs. Two-thirds got the answer wrong and most of the rest they simply could not work  it out from the information supplied.

However, when shown a hypothetical choice of simplified electricity tariffs to the same people mocked up to look like the price system on a petrol forecourt, 89 per cent were able to spot the cheapest deal. They could also find it four times quicker than for the  existing standard electricity tariffs.

Which? has been campaigning for energy tariffs to be much less complicated – with a simple, consistent unit price – so prices can be easily compared at a glance, like on petrol forecourt displays, allowing people to find the cheapest deals with ease.

Which? executive director Richard Lloyd said: “Many consumers are struggling with ever-increasing energy bills and people tell us it is one of their biggest financial worries. With so few people able to identify the cheapest deal, it’s no surprise that the majority are paying over the odds for their gas and electricity.

“Energy prices should be presented in a clear, consistent and simple way so people can spot the cheapest tariff more easily, but our test shows that recent changes made by suppliers have not been enough. If the regulator Ofgem fails to deliver on its plans to simplify the market then the government must step in to help hard-pressed consumers.”

With food and some mortgage costs also rising, there are growing fears about how the elderly and hard-up will cope with the latest energy price  rises. Chancellor George Osborne last week urged both firms to reconsider the price rises, which have sparked warnings of more households being plunged into a “long, cold winter”. He said: “We’ve also got to do everything we can in Britain to try and keep those bills down. I would urge those energy companies to look again at any increases to see if they are absolutely necessary at a time like this.”

The pre-winter move from British Gas comes months after parent group Centrica posted a 23 per cent rise in half-year profits at its residential arm to £345 million. Unions attacked British Gas and called on the government to take action to tackle rising fuel prices.