New energy statements 'will confuse' says watchdog
- 3 August 2010
- From the section Business
New annual energy statements are likely to confuse the customers of some gas and electricity suppliers, the watchdog Consumer Focus has warned.
Companies were ordered by the regulator Ofgem to send a statement to every customer, with information about their energy use and how to switch suppliers.
Consumer Focus says that in the worst cases the statements look like bills.
The Energy Retail Association, which represents suppliers, says the statements are "a work in progress".
'Could do better'
Suppliers have been told by the regulator Ofgem to start sending out annual statements by the end of this year.
They are intended to help consumers understand their energy use and what it is costing them, and should include information such as the name of a customer's tariff, and any premiums or discounts.
They should also include a reminder that the customer can switch provider, along with advice on how to do so.
However Consumer Focus says some of the statements it has seen will not arm consumers with the information they need to get the best deal.
"Some are very good, others could do much better," says Audrey Gallacher, Consumer Focus's head of energy policy.
"They're confusing, not clearly labelled.
"Some companies are applying the letter of the regulations but not the spirit - and the spirit is that people get information to manage energy use and make comparisons," she added.
The energy companies claim it is too early to make a judgement about the standard of their annual statements, which were only sent out for the first time at the beginning of July.
Claire Newell from the Energy Retail Association says they will learn from the criticism.
"Companies are all competing with each other, trying to outdo each other on how good these look - but they're all bound by regulations set by Ofgem," she said.
"So what they'll all be doing is making sure they're abiding by those.
"But this is a work in progress and feedback like this helps companies to improve what they're sending out to customers and make sure it's really useful," she added.
Consumer Focus has assessed the early efforts of the six biggest energy companies and drawn up a league table.
British Gas comes out on top. It is praised for the clear, customer-friendly language of its annual statement.
E.ON and EDF also do well, but Scottish Power's statement is rated as average and the efforts of two companies - SSE and Npower - are classed as poor.
Ofgem announced last year that it would introduce the annual statements as a new condition of the energy companies' licences.
It shares Consumer Focus's disappointment with some of the early efforts.
Ofgem's managing director for markets, Andrew Wright, says a short paragraph at the end of a bill is not enough.
"We set out a clear requirement in the licence conditions that it must be clear and prominent - a separate piece of paper that the consumer could use to have all the information they need to switch suppliers," Mr Wright said.
"We are disappointed some companies have not complied with what we consider to be the spirit of this licence condition," he added.
If Ofgem decides a company is in breach of this licence regulation it can impose a fine of up to 10% of its annual turnover.
There is no suggestion that will happen yet, but the regulator will be contacting some companies to urge them to improve their annual statements.