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Energy bills: the 'great national scandal'

When will someone make our ever increasing energy bills easier to understand?

 
Energy bills: the 'great national scandal'

Our ever-increasing energy bills have been big news in recent weeks. They were today described as a 'great national scandal' by shadow energy and climate change secretary Meg Hillier at the Labour Party annual conference.

As predicted, EDF Energy this month finally became the last of the ‘Big Six’ energy suppliers to announce a double-digit increase in gas and electricity prices. A sobering thought for the 4.5 million or so households already in fuel poverty.

The good news, however, is that with prices likely to remain stable for a while now is the perfect time to switch suppliers. With bills so confusing though, it’s likely that a large percentage of people will end up staying on the same tariff, paying hundreds of pounds more than they need to for their energy.

Calls for consumer empowerment

At the Liberal Democrat conference last week energy secretary Chris Huhne launched an attack on ‘predatory’ energy suppliers, vowing to tackle confusing bills and force companies to better inform customers about where the best deals are – the idea being that even if energy companies do continue to introduce significant price increases at least we’ll be able to compare prices and switch suppliers more easily. At least, that's the theory.

Yet given how little the situation has improved since energy regulator Ofgem ordered suppliers to simplify their billing structures and provide customers with more information on switching this time last year, you can’t help but feel a little underwhelmed by Huhne’s sweeping promises.

Huhne’s speech came just days after worrying research from Which? revealed that our bills are so complicated that out of 37 people, including a solicitor, an engineer and an accountant, just one person – a company director – could work out how the bill had been calculated. If an accountant can’t decipher an energy bill what chance do the rest of us have!

Now the issue of energy bills is being politicised perhaps this time we'll see some results – is the energy rip-off the new banking rip-off? After years of fighting against consumer groups' calls for a Competition Commission inquiry into the industry, several energy companies have now come forward and said they would support a full-blown, costly investigation. Whether that means they genuinely have nothing to hide isn't clear. The point is the people in power are finally starting to take notice and highlight the fact that customers are suffering.

However, until someone takes some actual action, it’s up to us to do the best we can to improve our own situations.

So, having just moved into a new home I decided it was about time to do as I say: take some action. Previously, as my live-in landlord had always managed the utility bills I’d pretty much stayed out of it.

Now it’s my turn. A daunting task – especially after my experience of paying our gas bill last week.  

Them: you owe £41.53.

Me: the bill says £27.53

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19 comments so far. Why not have your say?

Ann Barton

Sep 27, 2011 at 18:02

Everyone should switch away from the Big Six who are making fools of us -

try some of the smaller suppliers. I've just given my first online meter read to Cooperative Energy, they are keeping it simple, just as bills were several years ago. I hated being ripped off by npower !

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Alasdair Lawrance

Sep 27, 2011 at 18:05

Once you accept that "competition" is a myth, an illusionand that our energy needs are supplied by an effective cartel that controls the supply and price weare forced to pay, it all becomes clear. And when Mr Huhne starts whinging about the public being too lazy to seek the cheapest deal, the reply is that actually I do have a life.....

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Ann Barton

Sep 27, 2011 at 18:14

npower have plenty to hide in my opinion, remember they refunded customers £70m last year for overcharging in 2008 after Consumer Focus became involved, our refund was £100.

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Anonymous 1 needed this 'off the record'

Sep 27, 2011 at 18:58

I used to advise businesses and farms on electricity tariffs. They were so complicated that each supplier took up a spreadsheet running into hundreds of different rates ranging from standing charges to various "discounts" for paying daily, weekly (5 days) weekly (7 days), monthly (28 days), monthly (calender), quarterly etc. etc.

It took a very large software programme and oodles of data input for it to calculate which was the most efficient tariff - and then lock in for a minimum of two years. Get it wrong and a company could end up paying £000s in overcharges!

At least with apples they taste different! The energy giants have had it their own way for too long.

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Geoff Robbins

Sep 27, 2011 at 21:06

shadow energy and climate change secretary Meg Hillier has an unmitigated cheek complaining about energy costs. It was the Labour government that signed us up to a reduced carbon level target by 2050 that is causing this problem now. Every time a new, wasteful, windmill is raised our bills will go up.

You want to do something to reduce your bills? Mail you MP and get the commitment to carbon reduction repealed from the statute books before we are all bankrupt.

Climate change is the biggest con that this perpetrated upon this country since the Common Market.

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john_r

Sep 27, 2011 at 23:26

I have been with British Gas for some years and my real gripe is not with their charges but with their opaque website. These people make it very difficult for you to find out what you could pay for a unit of electricity or gas. British gas website in my opinion has gone from very poor to very good over the last few years - I now find it deteriorating towards very poor again.

I know what I am paying for gas now but can't find what I would pay on a different tariff that is recommended to me (websaver 13). I've been trying for weeks. How can a major company get its website so wrong.

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Anonymous 2 needed this 'off the record'

Sep 28, 2011 at 06:36

Many years ago (how time flies) I worked for British Gas selling gas and electricity to the public and small businesses. I won an award for the best quality sales and was almost immediately rewarded with a 40% reduction in my remuneration.

I then found it almost impossible to sell when British Gas advertised that they were dropping standing charges; they didn't bother to also say that they recouped ALL the standing charges by charging a greater amount for the first so many units consumed.

People would say to me:

'Excellent! I save £70+ on my standing charges'

I felt obliged to tell then that wasn't strictly true and the only way to save your standing charge was to go away for three months and consume nothing - that benefited less than one in a million people!

I wore a British Gas uniform but was informed that if I told anybody that I worked for British Gas it was a sackable offoense. The Payroll was contracted out to an agency to avoid things like entitlements to any pension and there were zero travel expenses. When the agency was changed a talk was given and the guy giving it mentioned something to the effect that when one claimed travelling expenses............ he was shocked when I told him there were none.

Some pompous local manager told me 'Your hundred pounds per week basic salary covers your expenses' - what a load of rubbish.... it is the common law duty to provide an employee with the means to do a job and the salesforce were given neither transport or petrol or any of the other expenses associated with having to work away from home.

British Gas (aka Centrica) treated both their 'at arms length' salesforce and their customers with equal contempt though I believe a 'proper' employee would be treated far better.

I'm writing this 'off the record' as although I stand by the truth I don't particularly wish to be litigated against for being a very minor penny whistle blower.

Not that the salesforce were angels; many would sell and resell to their grannies just to make a weekly target. I had to work twice as hard and twice as long to earn less than half what 'good' sales people took home but then I acted ethically and never had a single complaint although a small percentage of customers changed their minds before their new contracts came into force.

The only way to make a true comparison is by working out your actual consumption and then using one of a couple of very good comparison sites (good advice with www.moneysavingexpert.com); normally it is also cheaper to pay by direct debit and have both gas and electricity from one supplier but this is not always the case as it depends on your consumption of each type of fuel.

Martin Lewis also persuaded the comparison site companies to give part of their commission back to you the customer so you can look forward to something like £40 credited to your bank account after a few months!

Good luck!

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Firoz Noman

Sep 28, 2011 at 08:34

I never managed to understand energy bills. I do not understand unit rates. I do not know how British Gas bills me. As Chris Hune announced in Lib Dem conference that he will fight against energy companies to provide more information to the customers. I hope that will bring us some more information to us. It would be very good for the customer if Chris Hune could force energy suppliers to provide 5 or 6 products only in the same name for all companies. Also, if all comparative tariffs are written on the bill will be highly appreciated as it will help customers to decide where to switch. We, the customer should raise our voice and I believe we will get Chris in our side.

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Anonymous 3 needed this 'off the record'

Sep 28, 2011 at 11:49

my power company wanted to increase my charges by 14% but if i changed suppliers they would charge £60 pounds. i looked on a comparison site and changed to edf. my supplier rang me and asked why i am changing and i told them in plain words you are ripping me off. they said we can do you a deal within a £10 of my new deal and we wont charge you for the change in tarrif. so i said why charge me more if i am now getting it for this price offered now i told them to get stuffed im leaving. this is clear that they dont have to charge more.

we need a state energy company like france germany and water companys to stop the great british rip off.

toothless goverment year after year after year.

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john_r

Sep 28, 2011 at 20:55

Apologies to British Gas. I have now sorted my computer / internet problems (my fault) and all the detailed cost information I wanted is on their website.

To Anonymous3 if you want to go back to being served by state suppliers I would remind you that before privatisation we had the most inefficient energy industry in the western world and with correspondingly higher prices.

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Alasdair Lawrance

Sep 28, 2011 at 21:16

John_r - can you provide some evidence for your statement about how inefficient/expensive our energy used to be, please?

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john_r

Sep 29, 2011 at 02:06

Alastair , My statements are an expression of my own experience through 1970's 1980's and 1990's and of my own business frustration caused by nationalised industries. Take British Telecom in the 70's, technically a generation behind the curve relying on relays instead of semiconductors with a work ethic to match. Three months waiting list to have a phone installed with no guarantee it wouldn't double. Four hours delay for an international call - these were the norm. Look at BT today up with the best in the world.

Now take British Gas. In the 70's when I personally called them under a guarantee policy to fix the electric timer on my central heating boiler what happened . Over a three hour period three gas fitters arrived in three different vans and they finally concluded that they would have to call out an electrician as the fault was electrical. That was how it was then - they had a monopoly. If they were losing money they could just asked for a bigger subsidy or put the price up. Take the Electrical Supply industry in the UK which (despite being subsidised) charged nearly twice as much for electricity than the US or Hong Kong (my main competitor in my 80's career ) and made the UK non competitive in energy intensive processes. So much so that we eventually recommended our customers to have energy intensive work done abroad. No we cannot afford to go back to nationalised industries - history tells us they simply don't work. They cost more and eventually provide less. Competition is the only way forward and hopefully the present goverment will focus on this.

To get back to energy, privatisation of the electrical industry was a sorry affair for the tens of thousands of victims - the apparently unnecessary workforce who were made redundant. Privatisation had found that they didn't need them. Despite the cost of generous redundancy payouts the new privatised companies committed to the regulators to reduce the cost of electricity year on year and ... the rest is history.

To put some figures into my answer the University of Greenwich did some research in 2002 and presented information showing that under privatisation, electricity costs reduced by 18% from 1990 to 1998

Considering the high inflation rate of the 1990's that is impressive.

What was also highlighted is that generation costs were fairly constant over that period and that reductions were made by way of distribution , supply and transmission costs. There are many other conclusions and interpretations in the report.

Today the UK is still more expensive than the US or Hong Kong but we have narrowed the gap. Compared with the rest of Europe we are very competitive despite obstacles like Labour's windfall tax on the generators which the consumer has paid for.

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Daye Tucker

Oct 02, 2011 at 11:26

Simplifying bills must be a watchdog priority, but a glance at another Citywire topic displaying comparisons between some EU Nations demonstrates that overall, the UK is not significantly worse off. http://www.citywire.co.uk/money/chart-of-the-day-welcome-to-the-worst-place-to-live-in-europe/a528361?re=16115&ea=34289&utm_source=BulkEmail_Money_Weekly&utm_medium=BulkEmail_Money_Weekly&utm_campaign=BulkEmail_Money_Weekly

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Graham Williams

Oct 02, 2011 at 12:06

What is the problem? All you need to know to understand how energy bills are worked out was included in GCE "O" Level Science in the 1950's, nothing complicated.

I have switched without problems several times, sometimes using comparison sites, never rely on just one, and sometimes spending a few hours working out all the options myself. The latter was then compared with comparison sites to check their reliability.

All very simple really, but maybe it is because I had a good Grammar School education.

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Hotrod

Oct 02, 2011 at 12:23

The fuels I use are electricity and anthracite coal.

My electricity bill is lower than average therefore I don't subscribe to the idea that I could make substantial savings if I switched. My argument is based on the fact that you cannot compare like with like because suppliers do not adjust their tarrifs in unison. This means that a list of comparisons will be out of date within a month of publication, and you may find that after a short period of time the company you were originally with has now become the most competitive.

I haven't changed my supplier for twenty years. It is currently called nPower. I am on a quarterly tarrif . I pay for the first "x" number of units at a premium rate and then the remainder at a reduced rate, which is quite easy to understand.

However, I had reason to query a recent bill. This was brought about because in our area they have reduced the number of meter readings from four to two. So for two quarters consumption is estimated. Now this is crafty bit. nPower informed me that my next bill would most likely increase by 10% because of increased tarrifs, but I then found by checking the meter reading myself that their estimated bill was approximately 30% LESS than it should have been. If I had been acquiescent and just paid what I was billed, I would have had to pay the 30% deficiency at the higher rate when my meter was next checked.

The problem was soon rectified however because the company has an online facility whereby customers can register their own meter readings if they dispute the estimation.

My supply of fuel for my solid fuel range cooker with central heating boiler, has not been without its problems either. You see these all singing all dancing appliances look good in theory but from my experience, are deficient in one department or another. Mine is excellent for heating the water for central heating and domestic use, but is seldom hot enough for cooking.

It works best when burning anthracite, but here comes the rub. My local supplier doesn't like bagging up 100% anthracite because he/she would rather sell a blend of anthracite, petroleum coke, and fines, which can be delivered at a more competitive price.

I have never been one to blame someone else for my problems, so I now fetch my own fuel from a cash and carry yard, where they are only too pleased to sell me 100% anthracite. I get THREE warms out of it, (loading, unloading, and burning)

Oh by the way; did you see Edwina Currie on Strictly come dancing last night? I reckon I'd have to turn my stove down if I had her around.

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Mark22

Oct 02, 2011 at 14:25

I have looked at various price comparison websites using my own figures and (in the East Midlands) Scottish Power always come out cheapest. I am a Scottish Power customer and I rang them up to ask them if there was a cheaper tariff than the one I was using.

They very kindly told me there was and I switched with no problem.

Surely it wouldn't be impossible for a simple piece of regulation from Ofgem to say that with each bill, the company involved should provide the cheapest rate for that bill and a free switching service.

All of a sudden everybody would switch to the cheapest rate from that supplier for them. If we chose to switch suppliers as well then that would be our option. The biggest rip-off is that a single supplier can be overcharging an individual, not that the prices between suppliers is different.

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82 yo

Oct 02, 2011 at 14:25

The Gov't is significantly adding to the cost of energy by surcharging the electricity producers using fossil fuels on the excuse that they damage the environment, it is a complex issue but what a con, and we pay for it.

Wind power is another con we pay for. We need a total reassessment of the energy policy, and some honesty at Gov't level.

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Rob Walker

Oct 03, 2011 at 12:24

I have never heard or seen any comment (in recent years) that the creation of competative activity in energy supply has ever benefited the customer. As all these energy companies share the source of supply, the oncost of all these adverts, nuisance callers, comparison websites etc must be unproductive. Bring back the Gas Board and Electricity Board. They may have been inefficient but at least any additional cost was spent on employees, customer shops, meter readers etc. As for Chris Huhne's comment, he is admitting that as well as all the extra costs promoting different Energy Companies' tariffs he expects us all to invest time and effort working out the best deal instead of doing something useful.

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Tim Peters

Oct 07, 2011 at 09:43

Try Ebico - they use Southern Electric as supplier (I think?). They only have one tariff, (no silly 'offers' and 'deals' etc). I swapped a couple of months ago, and have had my first bill - it's a joy to read - so simple! It could be the way forward . . . .

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