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Greedy energy giants still trying to bamboozle us

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Greedy energy firms have been accused of manipulating new daily charges to entice customers on to expensive deals.

This year, Britain’s energy giants must simplify their tariffs.

Instead of offering confusing tiers of different rates, they must bring in a standard daily fee to cover their costs for supplying gas and electricity.

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Customers will then pay a single flat rate for every unit of energy they actually use.

The idea is intended to make it easier for customers to find the cheapest deals.

In theory, the standing single charge offered by different firms should be almost the same as it is supposed to cover fixed costs such as billing, distribution, metering and environmental taxes.

But research has revealed it will vary from nothing to 51p a day, adding hundreds of pounds a year to bills.

Households will also have to pay a separate standing charge for gas and for electricity.

Some firms are even levying higher standing charges depending on which tariff you sign up for.

This makes it very difficult for consumers to work out which deal is the best.

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Instead of looking at the upfront rate  that each tariff charges per unit of power, customers will have to look at the total cost of standing charges and the estimated amount of energy they will use during a year.

 

Tom Lyon, of price comparison website uSwitch, says: ‘Standing charges are supposed to simplify things for consumers and make it easier for them to compare deals. But they are now in danger of being bamboozled by an array of different rates.

‘It might be dressed differently, but the complexity is still there and this cannot be what was envisaged when the regulator asked firms to introduce standing charges.’

Under the current system, households pay one rate for the first few units, measured in kilowatt hours (Kwh), of gas and electricity they use and a cheaper one for everything after that.

The higher initial rate is supposed to cover fixed costs.

But this system has been criticised for being too confusing, as the number and cost of units varies wildly from tariff to tariff. The energy regulator Ofgem has demanded firms change this system by the end of the year.

From January 2014, customers will be billed a single standing charge for supplying customers with their power and gas. British Gas, EDF, E.on, Npower and Scottish & Southern Energy (SSE) have already brought these in for all new customers.

But the new deals have highlighted vast discrepancies. Npower charges a 47p-a-day standing charge for gas and 11p for electricity on its standard deal — a total of £211.70 a year.

But its Energy Online August 2014 tariff has a 51p-a-day standing charge for gas and 45p for electricity — a total of £350.40.

EDF, Ovo, and Scottish & Southern Energy have one standing charge. EDF charges 26p a day for gas and 19p for electricity, Ovo 23p a day for each fuel and SSE 27p a day for each.

On top of this, SSE gives its customers who pay by direct debit a £40-a-year discount, while those who opt for paperless billing will get a further £6 a year off.

A spokesperson for EDF says: ‘We believe offering the same standing charge on all tariffs, in all regions and for all meter types makes it far simpler for customers to compare tariffs and understand what makes up their bill.

‘We also believe it is fairer because customers pay the same standing charge to cover the fixed costs of supplying gas and electricity to their home.’

However, a spokesperson for Npower says: ‘If we all have the same standing charge, where is the competition?

‘Suppliers can do some things cheaper than others.

‘We all use different amounts of gas and electricity so we need a choice of tariffs to cater for people’s different needs.’

A spokesperson for Ofgem says: ‘We are not trying to force people to pay more for their energy.

‘Suppliers are responsible for setting the level of the standing charge and have the option of not having a standing charge at all if they wish.

‘Through our reforms suppliers will be obliged to show customers what their cheapest offer is on each bill — so customers that are asked to pay high standing charges could move onto tariffs where this charge is lower.’

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