Friday, 14 October 2011

Energy companies profiting at our expense

I was listening to the radio this morning when the interviewee was asked about 'confusion marketing' by energy companies, namely, the idea that they come up with a large number of tariffs and deals so that consumers are confused. With over 400 tariffs on the market, it would seem that it's definitely something they're involved in.

So it's good news that Ofgem is finally putting some pressure on the companies to simplify their tariffs and to give customers a better deal, but it's been a very long time coming. And with estimated profit figures of £125 per customer per's sorely needed.

I'm not an energy expert but I have done my fair share of reporting on energy stories over the years (starting off, ironically, with a programme in the late 90s devoted to the idea that consumers would be baffled by 'confusion marketing' when the energy market was first deregulated). It's been over 12 years since the energy market was opened up to competition and many consumers still aren't getting a good deal.

We've had mis-selling on the doorstep (which has only just been tackled in the last few months), people on pre-payment meters being forced to pay far too much for their energy, energy companies altering people's direct debits without an explanation of why and - in many cases - when their accounts were in credit and, only yesterday, Which? finding that in a third of its mystery phone calls, the energy suppliers' own staff didn't know which deal was the cheapest.

Oh, and I haven't even mentioned the Warm Homes Discount fiasco, where energy companies (British Gas excepted) won't promise that everyone who qualifies for a discount off their energy bill will get it.

If we were talking about a 'luxury purchase' this wouldn't be so serious. But it's not. It's gas and electricity. It's what we need to heat and light our homes.

Ofgem says that we could see simplified tariffs by the winter of 2012 'providing the industry get fully behind our reforms'. I've contacted the energy suppliers' trade body and am awaiting their response. They know that if they decide to fight these reforms, the Competition Commission may have to get involved and, if that happens, any change could take years to come in.

In my view, energy suppliers' customers deserve rather better than that.

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