A stunning 65% of energy consumers are still finding it difficult to determine the cheapest energy tariff supplied by the country ëbig sixí energy suppliers, despite recent reform to the industry will see energy bills simplified to serve this purpose.
Consumer group Which? conducted a survey that gauged bill payers attitudes towards the new simplified bills, which have been modified so that they made it easy to ascertain what the cheapest tariff on the market was at present.
The new billing is officially set to be unveiled form April 1st, though comparison sites are suppose to have already adopted the new pricing structure.
However, many of the consumers who were polled have already identified that even with a calculator it is extremely difficult to clearly determine the cheapest deal on the market, and the news bodes ominously for the new billing structure, which has hardly impressed consumers polled by Which?
Just 35% of those polled said that they had managed to identify the cheapest deal from the new bill structure, which is suppose to clearly breakdown the bill costs into the rate paid for each kilowatt hour used and the daily standing charge.
Astonishingly, in a survey of over 1500 people, around 30% of people polled said their lack of clarity on the new bill structure had meant they had not signed up for the cheapest deal on the market, whilst the other 35% said that they were so confusing that they had not even been able to ascertain the method required to work out the cheapest deal.
“In spite of Ofgem’s tariff reforms to simplify the market, consumers are still failing to spot the cheapest deal because energy pricing remains too complicated,” said Richard Lloyd, the executive director of Which?
“More radical changes are needed to fix the broken energy market. That’s why our Fix the Big Six campaign is also calling for a full competition inquiry, so that hard-pressed consumers can be confident that the market works well for them as well as shareholders, and that the price they pay is fair.”
The key reforms that have been made are the introduction of a fixed rate standing charge that should be clearly displayed on a daily or annual basis, and a clearly defined unit rate, which should illustrate to bill payers just how much they are paying for every unit of gas or electricity used.
Ofgem have since announced that they will instigate their new Tariff Comparison Rate from April, which will function in an equivocal manner to APR comparison on loans.
The measure has been consutrcted so that it incorporates the collective costs of standing charges and unit rates into one, singular figure.
Ofgem hopes that this will make the process of comparing deals on the market substantially easier, as people will only have to compare TCRís in order to identify the cheapest deal.
However, Which? has argued that the change will only work if everyone used the same amount of energy, and that TCRís will become misleading if people use substantially more or less than the average user. They called for Ofgem to reconsider their reforms, as their research had indicated that they might not be as effective as Ofgem envisage.
Ofgem have rebuffed Which?ís claims, arguing that they have not had the chance to view all of their upcoming reforms, including the TCR, and urged them to wait till April 1st when the new bills are set to be officially unveiled before casting a value judgement on them.
Step in the right direction
Despite the relatively high number of people still struggling to determine the cheapest deal on the market, Which? did identify that the 35% of people who could was a marked increase from 2 years ago, where just 8% of consumers identified that they were able to clearly navigate bills to get on the cheapest deal.
Ofgem’s consumer associate, Philip Cullum, highlighted that the current deficiencies in Ofgemís reforms were due to the fact that they had devised them individually, and had not tested how they would work together. He urged consumers to wait till the new billing was officially released before casting judgement on them.
Mr Cullum said: “In developing our reforms we conducted many detailed research projects with consumers to understand their views of the market. We are confident that our reform package will make the market simpler, clearer, and fairer for consumers, and make it much easier for them to choose the right deal, while still allowing suppliers to innovate in their offerings to consumers.”
Energy UK, an ambassador for the UKís ëbig sixí energy providers, said the rise in people choosing the cheapest tariff from 8% two years ago to 35% today indicated that the market is progressing well, and forecasted it to keep improving for consumers, moving forward to the future.
It said: “Energy companies have made great changes helping customers find the best deal available. We are pleased the survey results show an increase in customer understanding and the energy industry is continuing to work with customers and consumer groups so more people understand their bills and choices
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