Protection plans for the vulnerable

Plans by Ofgem to introduce a price cap for pre-payment customers would not solve fundamental problems with the energy pricing system, according to Energy Advice Line.

Julian Morgan, managing director of the price comparison, switching and advice service for energy users, said the proposal aimed at helping vulnerable customers did not include incentives for more people to engage with the market and switch suppliers.

"Ofgem has announced it will go ahead with recommendations made by the Competition and Markets Authority (CMA) in its report earlier in this year for four million pre-pay customers to have their energy bills capped," Mr Morgan said.

"It is true that these customers need help because they're paying an average of £220 a year more than those on the cheapest deals, because suppliers say pre-meters are more expensive than standard.

"But the plans do not address the energy market's fundamental problem. More than 70% of the customers of the Big Six suppliers are on standard tariffs - by far the most expensive on the market. Quite simply, they are paying far more than they need to, and this isn't fair.

"The CMA report didn't go far enough to incentivise the vast majority of customers who are disengaged from the market and paying over the odds."

Bosses at First Utility, one of the UK's smaller energy companies, has suggested that Big Six customers who do not switc hsupplier after a certain period of time should automatically be flipped to the best tariff.

In this report, the CMA admitted that customers on the most expensive tariffs could save £300 a year by switching, but other than the price cap for pre-payments, did not make suggestions incentivising enough to encourage more people to switch.

It recommended that current rules limiting suppliers to a maximum of four tariffs should be scrapped in order to promote more competition. It suggested that energy firms that supply micro-businesses - those that employ fewer than 10 people - should be forced to be more transparent, by publishing their prices.

The report also said that these tiny SMEs should not be locked into expensive 'roll-over' contracts.

"These suggestions are all well and good, but will do little to reduce the pain of householders and businesses struggling with high bills, or encourage them to shop around and switch," Mr Morgan said.

The Energy Advice Line is a consumer champion and an independent price comparison and switching service for householders and small and medium-sized businesses. The service enables consumers to quickly and simply compare electricity and gas prices, and to switch to the best available deal on the market.

The service also offers free advice and a contract management service, including alerts to remind business consumers when their fixed-term energy contracts are about to end.

For further information, visit energyadviceline.org.uk

Not enough people switch

Record numbers of consumers switched energy supplier in July despite the summer holiday break, but millions are still paying over the odds for their gas and electricity, according to the Energy Advice Line.

New government figures show that 333,653 customers switched suppliers last month - 22% more than at the same time last year - bringing the total number of switchers for the year to 2.7 million.

"These figures are obviously good news, as switching is the best and cheapest way to save money on your energy bills," Mr Morgan said. "This fact is confirmed by the government and the regulator.

"The problem is that according to a recent report by the Competition and Markets Authority (CMA), 70% of the customers of hte Big Six suppliers are languishing on the most expensive standard tariffs.

"In other words, the vast majority of energy consumers in the UK could switch to a much cheaper deal - and save £300 a year in the process - but they don't.

"So while these recent figures are a step in the right direction, there is still a very long way to go."

The figures also show that 76,174 customers switched to small and medium suppliers in July, representing almost one-quarter of all switches. Mr Morgan said that this suggested consumers continued to lack confidence in the Big Six suppliers.

The government claims the record number of switchers is a result of government initiatives to make the switching process simpler, and by highlighting the benefits of changing supplier.

But Mr Morgan said more incentives were urgently needed to incentivise long-term non-switchers to engage with the market and save money in the process.

"Various initiatives have been put in place, such as providing customers with clearer and simpler information on their bills in order to be able to compare prices more easily," Mr Morgan said.

"But lots more needs to be done to persuade people who never shop around to do so, and to convince them that the savings that can be achieved can be considerable."

"I urge anyone who hasn't switched supplier recently - particularly the large numbers who haven't done so for years, to seek out some of the great deals that are around at the moment," Mr Morgan said.

"Using a reliable and independent service like the Energy Advice Line makes it quick and simple, and could potentially save you hundreds of pounds."

The Energy Advice Line is one of the UK's leading price comparison and switching services for business and domestic energy customers. It is also an advocate for energy market reform and has campaigned for a better deal for energy users, including calling for a ban on cold calling and changes to regulations to make it easier for all consumers to switch suppliers.

The service is completely independent and free. Consumers can quickly and simply search the market for the best available energy deals from an extensive panel of small and large energy suppliers. The service also offers a free advice line for business energy customers.

For further information visit energyadviceline.org.uk

EAL dismisses CMA call for switch list

The latest report by the Competition and Markets Authority (CMA) showing more than 70% of energy consumers had never switched tariffs, was of grave concern, according to the Energy Advice Line.

A survey of 7,000 domestic energy customers carried out by the CMA as part of its probe into the energy market, also found that more than one-third of respondents had never considered switching supplier.

This was despite the fact that customers of the Big Six energy companies could have saved hundreds of pounds by switching to a rival firm.

"These findings are extremely alarming," said Julian Morgan, managing director of the Energy Advice Line.

"Yet another investigation has proved that switching suppliers has significant financial benefits, yet millions of customers are still failing to do it.

"Urgent action is now needed to persuade customers - in the strongest possible terms - to shop around for their energy, just as they do for all their other significant household purchases.

"Failing to do this is costing them considerable sums of money that most people simply can't afford to lose."

The CMA report, the culmination of a two-year, £80 million investigation of the energy industry, found that:

• 36% of those surveyed did not know it was possible to change tariff, payment method, and supplier
• 34% said they had never considered switching supplier
• 56% said they had never switching supplier
• 72% said they had never switching tariff

The report found that dual fuel customers of the Big Six suppliers could have saved an average £164 per year by switching over the previous three-and-a-half years, and in some cases as much as £245. The report pointed out that the potential savings from switching had risen substantially over the past two years, in some cases (depending on tariff) of £330 annually.

Mr Morgan welcomed the report's finding that third party internediaries, such as the Energy Advice Line, "significantly reduce search and switching costs for domestic customers by providing an easy means to gain personalised quotes, on a comparable basis, from a range of different suppliers."

But he rejected one of the report's recommendations for a national database of customers who had not switched over the past three years. This would see rival firms send their deals to the listed customers in the post.

"This would be a nightmare for consumers, who would be inundated with confusing offers from rival suppliers desperately competing for business," Mr Morgan said. "This would not help consumer engagement with the energy market, and could well have the opposite effect - all their communications could end up being ignored.

"As the CMA says itself, independent and reliable services like the Energy Advice Line are the quicklest, easiest and cheapest way to shop around for the best deals and change suppliers."

The Energy Advice Line is one of the UK's leading price comparison and switching services for business and domestic energy customers. It is also an advocate for energy market reform and has campaigned for a better deal for energy users, including callling for a ban on cold calling and changes to regulations to make it easier for all consumers to switch suppliers.

The service is completely independent and free. Consumers can quickly and simply search the market for the best available energy deals from an extensive panel of small and large energy suppliers. The service also offers a free advice line for business energy customers.

For further information visit energyadviceline.org.uk

Competition and Market Authority Report 2016

The Competition and Market Authority released their industry report last week. Despite the EU Referendum stealing the headlines, there is news that could be positive for the consumer. 

Government deals favouring suppliers are due to come to an end - currently energy providers are healthily rewarded for building power stations and generating energy. 

Often there is a set price for each unit of energy generated and this money goes towards the construction of infrastructure, usually an expensive implementation. 

However, these prices not only come from public money as a levy on bills but are also exceeding the current market rates. While it costs an additional £11 to every home owner's bill, annually it adds up to £310m. 

The CMA have put forward a recommendation that these deals should be awarded through auction, in turn saving the Government and consumers millions of pounds - in turn reducing their bills. 

You can start the savings early, and keep on top of them, by always ensuring your supply is coming from the provider with the cheapest rates. Energy Advice Line offer a free and unbiased comparison and switching service for both domestic and business consumers. To find out more and start the process visit energyadviceline.org.uk

Read the full report here.