The Government’s plans to simplify energy tariffs for consumers to find the best deal are “still too complex”, according to a new survey.
Consumer body Which? is calling for a single unit price for energy as its new research revealed only three in ten (28%) people got the right answer when asked to identify the cheapest deal from a range of tariffs using Ofgem’s Tariff Comparison Rate (TCR) proposal. When they were arranged using a single unit rate in the style of a petrol display, the figure increased to eight in ten (84%).
Two thirds (65%) of people said they preferred the single unit price model compared to just one in ten for the TCR. It also scored highly in terms of ease of understanding (62%), speed of use (63%) and helpfulness (53%).
Ofgem’s TCR aims to help consumers easily compare the price of different tariffs across the market, however, under new proposals they will only be given an indication of the cheapest deal based on an assumption of medium usage of both gas and electricity. Which? claims consumers would more likely pick the wrong deal for them.
Executive Director Richard Lloyd said: “Energy prices are the biggest worry for consumers but Ofgem’s current proposals will fail to help people find the best deal and could leave millions paying over the odds for their energy. You shouldn’t need a maths degree to work out the cheapest energy deal but the complexity of energy pricing makes it virtually impossible for most people to make sense of the market.
“Our research shows overwhelmingly that people find it easier to spot the cheapest deal for them when prices are presented clearly, simply and consistently – just like on the petrol station forecourt. The Prime Minister should intervene again to make sure that his energy reforms work for hard-pressed households.”
The survey of more than 2,000 people also revealed more than half of people surveyed (55%) had never compared their energy tariff with others on the market. Only a quarter had switched energy suppliers, with seven in ten (70%) saying the main reason is to save money or get a cheaper deal.
Earlier this month the Government aimed to make sure the majority of UK households that don’t switch to get the best energy deal would soon be “savvy switchers”.