Consumer Focus expresses concern over confusing energy bills
January 20, 2011 at 4:41 pm
Consumer Focus has written a letter to energy industry regulator Ofgem complaining that the terms and conditions of energy tariffs should be made a lot clearer to avoid confusing customers.
Specifically, Consumer Focus has called for an investigation into how tariffs are marketed and sold by energy suppliers. The concern for Consumer Focus is that the average energy consumer has trouble understanding all of the tariffs.
Back in March 2010, it carried out its own research into the matter, and the results suggested that a third of consumers don’t understand the information on their bills.
In total, there are 93 tariffs between the six biggest energy companies. With so many tariffs on offer it is easy to see how this could become confusing for customers.
The news follows on from the recent rises in gas and electricity bills, which have left many customers unhappy. Ofgem has now launched its own investigation into some of these rises.
The head of energy at Consumer Focus, Audrey Gallacher, said in the letter that tariffs are “often structured in ways that are overly complex and can seem designed to confuse the average consumer”. She also highlighted problems with “dubious discounts,” and revealed the shocking statistic that nearly 60% of consumers don’t know which tariff they are on or what they pay per unit.
However, the director of Energy UK, Christine McGourty, said that it is a good thing that consumers can choose from a large number of tariffs, and that customers can always call their energy companies to find out which is the best tariff for their situation.
Latest asset sale announced by oil giant
December 15, 2010 at 10:41 am
BP have announced that they have now sold 20 billion US dollars (the equivalent of £12.8 million) worth of assets to help their bid to pay for the devastating Gulf of Mexico oil disaster. The oil giant announced the figure after it agreed the sale of its majority stake in an Argentina-based company, with the deal due for completion early next year.
After previously selling interests in locations as diverse as Egypt and Vietnam, BP are now thought to have sold their 60% stake in Pan American Energy (PAE), with Bridas Corporation the recipients of this majority interest in the oil and gas firm.
Although the figure raised by the sale of this latest asset is significant and the 20 billion US dollar mark certainly a significant one, it still leaves BP some way off their intended target of 30 billion US dollars. It is thought that the oil giant will need to raise this figure by the end of next year in order to, in the words of BP group chief executive Bob Dudley, “meet … significant financial commitments” by paying the compensation bill for the oil spill that ended up being the largest offshore oil spill ever seen anywhere in the world.
The spill was triggered by a rig explosion back in April which killed 11 workers and allowed over 170 million gallons of oil to flood into the Gulf of Mexico. Although the well leaking the oil was finally sealed a few months ago, BP’s global reputation received a massive blow. The oil giant will surely be hopeful that by taking full financial responsibility for the incident, it will be taking one small step along the long road to recovery.
Centrica to shelve gas strorage plans
December 6, 2010 at 2:12 pm
The coalition government’s plans to improve the country’s gas security have received a significant blow after Centrica announced it would probably have to give up on its plan to construct a pair of gas storage facilities, with the current economic climate having a severe impact upon the scheme.
Centrica, which owns both British Gas and Scottish Gas, had intended to build one gas storage facility in the North Sea, with another constructed in the Irish Sea, with both facilities expected to cost around £1.5 billion.
The first unit would have been capable of holding a significant total of 1.7 billion cubic metres of gas, whilst the one in the Irish sea would have been able to hold 570 million cubic metres.
With the government looking to ease the worries that over-reliance upon imported gas brings over the next ten years or so, and Centrica’s proposal potentially able to increase Britain’s gas storage capacity by approximately a third, officials at the company have announced that they’re unwilling to begin construction unless the coalition government can subsidise the entire proposal.
Whilst a final investment decision is not due to be made until the start of the New Year, the noises emerging from the Centrica camp won’t be music to the ears of the government, with the company’s decision likely to be used by the opposition to highlight a failure of the coalition to deal with a problem that could endanger the old and vulnerable in the UK if supplies run too low in the future.
The last thing that Britain needs is to be held to ransom by gas suppliers over gas prices, as happened in the Ukraine back in early 2006, but if the government and Centrica fail to cut a deal, that is precisely what we may be left facing in the not so distant future.
Energy bills to rise to meet investment needs
December 6, 2010 at 2:10 pm
There was yet more bad news for energy customers recently as Ofgem warned that energy bills could double over the next ten years to raise the £32 billion needed to upgrade Britain’s energy network.
Much of the network was constructed in the 1950s and 1960s and is becoming unsuitable to deal with the way that consumers are using energy, as we shift to a low-carbon economy. By upgrading the pipes and wires in the network, the UK will be able to guarantee its energy supplies in the future.
Alistair Buchanan, the chief executive of Ofgem, said on the BBC Radio 4 Today programme that bills could add £6 a year over the following ten years.
However, comparison websites and consumer groups have been quick to heap further misery on energy customers by revealing that we could be facing much larger hikes of between 50% and 100%. They claim that Ofgem is only referring to the price rises which will be required to transport the energy, whereas as gas becomes scarcer over the coming years this will also lead to further price increases.
This would see the average bill come to over £2,000 over ten years, a shocking thought for the majority of energy customers.
The warnings follow on from the news that energy companies have recently witnessed a rise in wholesale prices. Wholesale prices are predicted to rise by 13% by the time spring arrives. If the full price increases are passed on to customers then this could see the average annual gas bill rise by £81.
British Gas offering free cavity wall insulation to the over 60s
October 21, 2010 at 4:53 am
British Gas has announced that it is happy to give away £10 million worth of cavity-wall insulation to customers over the age of 60. This should come as a welcome relief to pensioners, who have made up one of the groups to have suffered the greatest from the effects of the recession, with their savings seeing little to no return after the drastic plummeting of interest rates.
The energy supplier has suggested that those customers who choose to take them up on their offer will be able to save around £110 a year on their energy bills and, in addition, will help to save the planet by reducing CO2 emissions.
A spokesperson for British Gas argued that “British Gas is leading the way in making Britain’s homes warmer and more energy efficient. We are the first energy supplier to offer free cavity-wall insulation to the over 60s nationwide and we have the fastest growing insulation business in the country”. However, with British Gas having spent both time and money in its bid to improve its public image in recent times, some cynics are likely to suggest that the move is aimed more at improving the company’s reputation, rather than helping the customers which it has often failed to support in the past by not making the most of lower wholesale energy costs in reducing consumers’ energy bills.
Despite the generosity of the offer, only houses that have cavity walls will be eligible for the deal, meaning that only around 7 million homes in the UK are likely to be able to qualify and take advantage of the scheme that would ultimately help them reduce the amount of wasted energy that escapes through walls.
Energy suppliers hiked prices during scrappage scheme
October 15, 2010 at 2:59 am
A freedom of information request has revealed that major energy suppliers have been charging a price more than a third higher than the average cost consumers paid to small or medium companies when purchasing a new boiler. The average extra cost of using a major supplier reached an extortionate figure of £812, a hefty sum even in a normal economic climate.
With companies such as British Gas offering to match the money provided by the government for consumers to upgrade their boilers, many customers had previously thought that they were receiving excellent deals from caring companies which fully understood the desire of consumers to go green, but only at the right price.
However, this revelation is likely to sour the mood of consumers, who may now be finding out that they barely saved anything during the scrappage scheme due to the hiked prices.
Speaking about this recent revelation, Peter Thom, an independent installer and heating strategy group chairman for the Energy Efficiency Partnership for Homes, suggested that “when the scheme was launched Gordon Brown said isn’t it wonderful that people like British Gas match the scheme with £400. But the only people who can do this are the big energy suppliers. They’re renowned for toploading prices and then offering a discount”.
Whilst it is clear that companies such as British Gas are going to continue to dominate the market, this revelation (combined with consumers continuing to look to find a way to save money during the current economic climate) could lead to smaller independent groups beginning to dominate a larger chunk of the market unless big companies are able to improve their reputations.
Npower rues £70m refund
October 13, 2010 at 2:49 pm
On October 1st, a three-year row over gas tariffs finally ended, after dual-fuel provider, Npower, agreed to repay a share of £70 million to customers it had overcharged in the past.
The repayment, which could be shared between 1.8 million people, stands as reparations for a poorly communicated change in the way the supplier bills its subscribers for their gas supply, dating back to 2007.
Npower altered its gas tariff to charge customers a set amount of ‘primary block units’ per month, regardless of the time of year.
In previous years, customers might have paid less for their gas during the winter, when consumption is higher, but the new tariffs meant that everybody had to pay a fixed rate all year round.
Whilst the supplier claims that the “vast majority of customers” benefited from the overhaul, people who consumed relatively small amounts of gas were sent bills that charged them for units that they had not used. In some cases, Npower’s customers had up to £100 added to their gas bill.
However, the average refund is much closer to £35, with repayments from an identical sales probe in 2009 being deducted from the final sum.
Npower paid an average of £6 per affected customer during the first round of repayments but Consumer Focus, a self-proclaimed “consumer champion”, took umbrage with the sum, finding it simply inadequate.
The watchdog then badgered Npower for 20 months in order to persuade the energy firm to commit to repayments that would take into account how much money customers had actually lost, rather than sending out the same £6 cheque to every subscriber.
Speaking after Friday’s announcement, Npower’s Head of PR, Richard Frost, was apologetic, stating: “We are sorry that the complexity of the changes we made caused confusion. We are now doing all we can to improve our communication with customers”.
Npower claims that it will write to affected customers (both current and former) within the next two months and all refunds will be redeemable at the Post Office.
Hidden energy price increases – government may step in
October 1, 2010 at 2:36 pm
It’s a practice that frustrates energy customers across the country: energy providers increasing their prices without informing their customers first. Sometimes it is months before customers realise that they are paying more, and now the practice has been highlighted by energy secretary Chris Huhne who has vowed to crack down on it.
Speaking to Liberal Democrat delegates at the party conference, Huhne warned energy companies that if more is not done soon to stop this unfair practice then the government would have to step in, stating that he would use his “ministerial powers” to intervene. He highlighted the fact that in any other business the consumers “know the price before they buy”, and asked why it should be any different when people are buying their gas and electricity.
He stated that in some instances energy companies have gone for 65 days before informing their customers that their bills have increased, which he described as “outrageous”.
By informing customers before the prices of their bills go up, customers will then have an opportunity to investigate alternative providers and switch suppliers if necessary. On top of that, it would also help customers to budget more effectively for the price increase when it came into force.
Huhne also said that the government would insist that energy companies include more information on their bills. This would provide customers with details about rival companies’ deals and make it clear that they can switch to another provider if they want to. The idea is that if consumers have access to the extra information this will force down unfair prices.
Natural gas storage scheme increases UK storage by 15%
September 24, 2010 at 1:41 pm
Natural gas storage in the UK has just been given a major boost following the approval of a new scheme. The Saltfleetby onshore gas site in Lincolnshire will be converted into a gas storage site, with a capacity of 800 million cubic tonnes of natural gas.
To put this volume into perspective, it will increase natural gas storage capacity in the UK by 15%.
It was originally planned to be up and running by 2011, but the public inquiry to approve the new scheme delayed the process somewhat. The storage facility is now expected to be functional by 2013.
Charles Hendry, the energy minister, said that the project “will provide the UK with new and much-needed gas storage.” He highlighted that the government has made ensuring gas supplies a priority due to the country’s dependency upon gas imports. He also suggested that more gas storage was planned for the future.
The project will be managed by Wingas Storage, which will convert the onshore gas field into an underground storage facility. Currently the site is the biggest onshore gas field in the country.
The aim is to store compressed gas 2.3 km below ground when demand is lower, and then when demand for gas becomes higher it can be extracted and used by consumers.
However, despite the huge increase in natural gas storage as a result of the new site, critics have highlighted the fact that it is only a start, and that even a 15% rise only increases our capacity by a couple of days due to the UK having one of the lowest storage levels in Europe.
87% pay too much for their energy
September 17, 2010 at 4:07 am
The vast majority of energy customers across the country are paying too much, according to price comparison site uSwitch.com, who revealed that a massive 87% of energy customers are not taking advantage of cheaper deals to be found online.
Only 13% of customers are currently wily enough to seek out cheaper deals for their energy online, and it’s not just a few pennies here and there that they are saving; uSwitch.com states that the extra amount of money the millions of households are paying for their energy by sticking to the most expensive tariffs stacks up to a massive figure of £2.2 billion.
It seems that price guarantee plans (which are taken out by 7 million households across the country) and pre-payment meters (which account for 2.6 million gas customers and 3.8 million electricity customers) are the worst deals for customers. uSwitch.com has revealed that those people on standard plans pay about £300 more a year than other customers with online tariffs, despite the fact that annual statements have now been changed to be clearer so customers can choose the best deals.
The director of consumer policy at uSwitch.com, Ann Robinson, said that between 2008 and 2009 only a million households had switched to cheaper online deals.
She said that, although the market is competitive, not enough people are taking advantage of cheaper deals, and urged householders to “move to dual fuel, pay by direct debit and sign up to an online plan so that they can start to enjoy competitive prices straight away”. She also said that Ofgem needs to do more to help get the message through to customers that they can take advantage of more competitive bills.
