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‘Simplified’ energy tariffs still too confusing, says Which?

Joanna Faith
Written By:
Joanna Faith
Posted:
Updated:
14/03/2014

Simplified energy tariffs brought in by the regulator Ofgem are still too confusing, according to consumer group Which?

In a survey of 500 people, only 35% of consumers were able to pick the cheapest deal available from the big six energy firms when presented with the new tariffs.

Of the rest, 31% picked the wrong tariff and 34% either didn’t think it was possible to calculate the best tariff or didn’t know how to.

“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 Which? executive director Richard Lloyd.

Alongside the new tariff structure, Ofgem is also bringing in a new system of presenting energy tariffs called the Tariff Comparison Rate (TCR).

This displays tariffs based on what a medium energy user would pay for their gas and electricity only, but does not help low or high energy users.

Which? research found that only 8% of consumers found the TCR display easy to understand.

When people were asked to pick the cheapest deal for a very low-energy user 64% chose the supplier with the lowest TCR figure. However this would not have provided the cheapest deal for a very low user as there is no way of working that out using the TCR.

Which? said it was concerned that as TCRs are likely to appear in advertising and on comparison sites, some consumers could end up worse off by incorrectly using them to compare and decide on a new tariff.

Ofgem’s consumer partner Philip Cullum said: “Which?’s research looks at individual elements of Ofgem’s package of reforms and does not consider how all of these will work together in practice. 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.”

 


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