Unless you’ve been living under a rock for the last five years, it cannot have escaped your attention that Great Britain’s energy market has been subject to significant scrutiny and public debate. And as this debate continues through the latest political to and fro, the market also continues to be the subject of some very large, complicated reforms.
Our need to decarbonise supply while keeping the lights on and ensuring ongoing affordability – the so-called energy trilemma – has caused no end of headaches and deliberation for suppliers, networks, Government, regulators and civil society.
At the heart of the matter sits behaviour change and the mammoth effort required to fundamentally re-orientate how consumers consider and act on their energy consumption. This is no small task in itself, but many feel that it has not been helped in recent years by our complicated and opaque energy retail market.
The industry’s latest attempts to change that situation were implemented recently through Ofgem’s Retail Market Review which, amongst other things, forced suppliers to radically reduce the number of tariffs they offered and required them to inform consumers when they could secure a cheaper tariff.
Despite this positive step, most people’s starting point for engaging with their energy use and the wider market – their bill – is still seen by many as complicated and loaded with unnecessary jargon.
Indeed the latest data from the Citizens Advice Consumer Service appears to confirm this view, with the number of domestic consumer complaints over clarity of bills recorded in 2014 (Jan-Nov) totalling nearly 5,000. That figure represents an increase of 27 per cent over 2013 data, so it is an issue that does not appear set to go away any time soon.
And recent polling from GFK gives further weight to this view, highlighting that only half of consumers are satisfied that they understand their energy bills (51 per cent for electricity, 50 per cent for gas). Among those who admitted to not understanding their bill, the three main difficulties were cited as; knowing the unit price for gas & electricity, knowing how much energy had been used over the period, and the layout.
The failure of energy suppliers to effectively communicate such basic information on bills to such a large volume of consumers can only be damaging to their renewed attempts to forge strong, trusting relationships with their customers. Ofgem’s Retail Market Review made some useful changes to bills, but did it address all of the issues leading to consumer confusion? We don’t think so.
In a previous attempt to address this issue, Citizens Advice instigated a working group, chaired by Ofgem, called the Consumer Bills and Communications Roundtable Group. It brought relevant stakeholder and industry organisations together to address the issue of how to make bills and other supplier communications simpler. However, despite two years of discussion the forum delivered very little in terms of practical solutions to the problem of complicated bills. Given the entire market is currently undergoing a probe by the Competition and Markets Authority, a clear opportunity exists for those that have concerns in this area to once again make their views known.
A couple of areas that we think might be worthy of further exploration include the calorific values on energy bills – it’s necessary to carry out the calculations of how much gas you’ve used but do you need to see all of the detail? Could it be something you have the option to request from your supplier? In addition, recent polling from GfK highlighted high public support for introduction of a uniform standing charge on all energy tariffs, with 65 per cent of consumers backing such a move. This is good news for an often-maligned aspect of bills, and shows that there is clear consumer demand for the sort of transparency that we believe will help people more easily compare energy costs and secure a better deal.
Ten years on from our super complaint on billing, we have commenced research in order to establish how suppliers’ approach has changed in the intervening period and what they need to do in order to ensure they deliver accurate bills following the national rollout of smart meters. Citizens Advice will use the evidence collected through this and similar exercises to persuade Ofgem and the Government of the need to take action.
If there is anything that you believe hampers people’s understanding of their energy bills then please get in touch with us either by email or in the comments section below, we’d really love to hear your views.