Energy bills 'still confusing', says Which?

Energy UK's Alun Rees says switching is "dead easy" following criticism that new simplified energy tariffs are still too confusing

New simplified energy tariffs are still too confusing, the consumer group Which? has claimed.

In a survey of 500 people, it found that only 35% picked the cheapest deal, when presented with bills in a new format.

The new bills - being brought in by the energy regulator Ofgem - are designed to make charges easier to understand.

Ofgem defended the changes, saying Which? had not taken account of all its forthcoming reforms.

Since January, energy suppliers have had to advertise their tariffs in terms of two rates:

  • A flat-rate standing charge, expressed on a daily or yearly basis
  • A unit rate, which shows the cost of each unit of electricity or gas consumed

The new tariffs are already used on price comparison sites, but the first bills showing them will not be sent out until 1 April.

Previously, not all companies quoted a standing charge, and some quoted two tiers of unit rates, a higher and a lower rate.

'Too complicated'

But the Which? survey showed widespread confusion when consumers tried to work out which was the cheapest rate on the new-look bills.

Even amongst those who used a calculator, only half managed to spot the best deal.

The following examples, taken from suppliers' websites, show why the new rates are still potentially confusing:

  • Npower: Standing Charge: 0p per day. Unit Rate: 17.105 p/kWh
  • SSE: Standing Charge: £60 per year. Unit Rate: 13.99 p/kWh
  • British Gas: Standing Charge: 26p per day. Unit Rate 12.27 p/kWh

Start Quote

Consumers are still failing to spot the cheapest deal because energy pricing remains too complicated”

End Quote Richard Lloyd Executive director, Which?

Consumers not only need to so some mental arithmetic to work out the cheapest deal, they also need to know how much gas or electricity they use in a year.

"In spite of Ofgem's tariff reforms to simplify the market, consumers are still failing to spot the cheapest deal because energy pricing remains too complicated," said Richard Lloyd, the executive director of Which?

The consumer group would like to see a single flat rate for energy, as happens with the price of petrol.

Right Deal

In an attempt to provide that, Ofgem will introduce a Tariff Comparison Rate (TCR) on bills from April, similar to an APR comparison on a loan.

This is designed to combine the Standing Charge and the Unit rate into a single measure.

For example, bills might show a TCR of 15.24p/kWh, which consumers should be able to compare directly with other suppliers.

But Which? warned that TCR is calculated only for a medium user of energy, so it does not always provide an accurate guide for switching supplier.

Ofgem said it had conducted widespread research amongst consumers before deciding on its reforms.

"We are confident that our reform package will make the market simpler, clearer, and fairer for consumers, and make it much easier for them to choose the right deal," said Philip Cullum, Ofgem's Consumer Partner.

More on This Story

The BBC is not responsible for the content of external Internet sites

More Business stories


BBC Business Live


    Tesco is cutting its dividend payout to shareholders. It says it will set the interim dividend at 1.16p per share - a reduction of 75% from last year's interim dividend.

    • Tesco warns of lower profits
    • House prices still rising says Nationwide
    • Malaysia Airlines to unveil restructuring

    Tesco's profits were previously expected to be £2.8bn for the year - now it says below £2.5bn.


    House prices are still going up says the Nationwide building society. In August they rose by another 0.8%, pushing the annual rate of inflation to 11%. It's the 16th monthly rise in a row.


    "We now expect trading profit for 2014/15 to be in the range of £2.4bn to £2.5bn. Trading profit for the six months ending 23 August 2014 is expected to be in the region of £1.1bn."


    Tesco has brought forward the start date for Philip Clarke's replacement David Lewis as boss. He now starts the job on Monday.

    TESCO PROFIT WARNING 07:05: Breaking News

    Tesco says its profits will be lower than expected. Dividends to be cut.

    Virgin planes

    Virgin Australia overnight announced losses of A$355.6m (£200.5m) for the year - more than three times its loss last time. It blamed "weak consumer sentiment" and too many planes - like its rival Qantas which reported its results yesterday.

    CO-OP VOTE 06:35: BBC Radio 4

    Big changes to the structure of the deeply troubled Co-op group will be put to a ballot of members tomorrow. Phil Dorrell, of consultants Retail Remedy, tells Today that even if the changes go through, a new leadership will have lot of work to do. "This will be a large step-change. My one concern would be that it probably shouldn't be the final change for the Co-op, they should consolidate, make sure they get their businesses back on track, and then have another look at it in a couple of years time."

    EUROZONE ECONOMY 06:22: Radio 5 live

    Wake Up to Money ponders whither the eurozone? This week France had to re-appoint its cabinet because of its failing economy. Italy re-entered recession earlier this month and even German GDP was down slightly in the latest quarter. Kathleen Brooks, from tells the programme: "Some economies are falling at a faster rate than others but what we've really seen is the core economies Germany and France lagging behind Spain."

    HOUSE PRICES 06:14:
    For Sale signs

    The gap between house sellers' asking prices and actual selling prices is widening, says the property website Hometrack. It explains that the market is cooling down, at least in terms of prices. It says sellers in England and Wales typically got 96% of their asking price in August, falling back for the third month in a row. But it adds house prices only tend to start falling when the percentage of the asking price that sellers achieve falls below 94%.

    GOOGLE DRONE 06:03:
    Google drone

    Overnight, Google said it was developing drones to act as flying delivery vehicles. The company calls it Project Wing. But it said it would take many years to create a service with lots of drones making lots of deliveries every day. More here.

    06:00: Rebecca Marston Business reporter, BBC News

    All of that. Stay with us - we're here 'til 13:00.

    06:00: Ian Pollock Business reporter, BBC News

    Good morning, we are here again, to keep you informed, educated and possibly entertained.



  • A painting of the White House on fire by Tom FreemanFinders keepers

    The odd objects looted by the British from Washington in 1814

  • Chris and Regina Catrambone with their daughter Maria LuisaSOS

    The millionaires who rescue people at sea

  • Plane7 days quiz

    What unusual offence got a Frenchman thrown off a plane?

  • Children testing a bridge at a model-making summer school in Crawley, West SussexSeeding science Watch

    The retired professor who turned village children into engineers

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.