Consumers still confused by energy bills after reforms

Six out of ten consumers still do not understand their energy bill a full two years after the introduction of reforms designed to make the information simpler and clearer.

Suppliers were instructed to simplify confusing tariffs
Suppliers were instructed to simplify confusing tariffs

Almost half of bill-payers (48 per cent) say they have seen no difference to their statements and more than half (51 per cent) are unable to recall seeing any information about cheaper tariffs – a requirement of regulator Ofgem’s April 2014 reforms, the poll for comparison site found.

Of those who knew that the cheapest tariff is displayed on bills, fewer than half (47 per cent) had switched.

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Younger consumers have the lowest level of bill comprehension, with 68 per cent of those aged 18 to 35 admitting they do not fully understand their statement, compared with 62 per cent of those aged 35 to 54 and 53 per cent of those aged 55 and over.

Under Ofgem’s reforms, suppliers were also instructed to simplify confusing and complex tariffs, which were limited to four core tariffs per customer for both gas and electricity.

In its long-awaited report last month, the Competition and Markets Authority (CMA) claimed British households were overpaying by £1.7 billion on average a year for their energy and said the Big Six providers have been taking existing customers for granted.

The CMA said it planned to launch an Ofgem-controlled database allowing rival suppliers to offer new tariffs to those stuck on standard variable tariffs (SVTs) for three years or more.

The CMA said too many households - 70 per cent of Big Six customers - were still on more expensive SVTs and could save more than £300 on average a year by switching.

Ann Robinson, uSwitch director of consumer policy, said: “The confusion around bills is a problem that must be tackled if consumers are to get in control of their energy use and spending. If they can’t make sense of their bill, customers could be missing out on better deals or risk bill shock by accumulating significant debt.

“Given that Ofgem’s reforms - which were designed to give clearer information to customers - came in two years ago, it’s worrying that so many remain baffled and bewildered by their bills.”

An Ofgem spokesman said: “Ofgem is committed to ensuring that consumers have the clearest information they need in their bills so they can make informed choices.”

Opinium surveyed 2,000 UK energy bill-payers online between 15 and 19 February.