Energy ads are confusing – they can’t all be “cheapest”

Energy suppliers have been confusing customers by claiming to be “cheaper” than their rivals – in adverts running at the same. That’s according to a consumer group which today points […]

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By Vicky Ellis

Energy suppliers have been confusing customers by claiming to be “cheaper” than their rivals – in adverts running at the same.

That’s according to a consumer group which today points the finger at EDF Energy, British Gas and npower for running ads earlier this year which boldly featured the words “cheapest” or “cheaper” than a rival but on closer inspection seemed to be misleading as they did not offer the cheapest deal on the market.

Which? also revealed figures this morning which show a significant 19 point increase in public distrust in energy companies over the last six months. More than half (54%) of the public now say they don’t trust energy companies, with only car salesmen distrusted more.

The consumer group’s latest report called ‘The Imbalance of Power’, warns the electricity market reform (EMR) is “doomed to fail” unless the Government sets out radical new measures which will increase competition, keeping prices in check.

Richard Lloyd, Which? executive director said: “There has been a collapse in trust in energy companies in the last six months… The Government’s energy tariff reforms are doomed to fail without more radical action to increase competition. Only with tougher action to tackle this broken market will consumers be confident they’re paying a fair price.”

The consumer group demands three new amendments to the Energy Bill which had its second reading in the Parliament yesterday:

– bringing in a single unit price so that energy prices and new deals can be easily compared at a glance, similar to the prices on petrol forecourt displays;

– improving the switching process, such as cutting the time it takes to switch;

– requiring energy companies make all their tariffs available no matter what the payment method is.

The demands may come too late for the Bill however, as DECC would not say if they could be included.

Energy Secretary Edward Davey said: “The Government knows that energy bills are hitting family finances. We are going to change the law so that energy companies place their customers on the cheapest tariff that meets their preferences… Under these plans millions of households will be moved to better energy deals, with companies limited to four simple tariffs for gas or electricity and people moved of poor-value ‘dead tariffs’.”

The trade group representing suppliers also had doubts about the plans’ impact on investment.

An Energy UK spokesperson said: “We must be alert to any signs that any changes put in place are detracting from interaction and innovation in the market – especially at a time when so much investment is needed in our energy infrastructure and all the jobs and economic growth that will flow from that.”

They added single-unit pricing would make deals easier to compare but may have “serious impacts” on the competitive market which would have to be considered “very carefully”, which Ofgem is currently doing.

Suppliers themselves also refuted the consumer group’s criticism. A British Gas spokesman said: “We strongly disagree with Which?. We thoroughly test our adverts with customers to ensure they deliver our messages as clearly as possible. We have received no complaints relating to Which?’s allegations.”