New research conducted jointly by Which? and EDF Energy has revealed simple pricing would lead to more consumers being able to easily spot the cheapest energy deal and increase their willingness to switch.
The research shows that the number of consumers spotting the cheapest energy tariff using simple pricing more than doubled when compared to the current pricing format of a standing charge and a unit rate.
Around nine in 10 could spot the best deal with simple pricing in both a price comparison (91%) and newspaper “flat table” scenario (87%), compared to only four in 10 (43%) under the current pricing format on a price comparison site and three in 10 (35%) in a flat table format.
As part of our Fair Energy Prices campaign, supported by more than 155,000 people, Which? is calling for the CMA to recommend suppliers introduce simple pricing. It allows consumers to compare the cost of energy tariffs at a glance, similar to how petrol prices are displayed on forecourts, without needing to know their consumption and means they can make decisions on switching faster.
The research carried out with EDF Energy, who have long supported this approach to simple pricing, asked 2,500 people to spot the cheapest tariff using our simple pricing model compared to what’s displayed now. We found:
- Six in ten (61%) said it was easy to make a choice with simple pricing versus four in 10 (38%) who thought it was easy with the current model;
- The average time people took to choose a tariff under the simple pricing structure was 36 seconds compared with 55 seconds for those under the current pricing format;
- Around half (47%) said they would switch their energy tariff when looking at the simple pricing table compared to fewer than four in 10 (38%) who were given the table with the prices laid out in their current format.
Which? executive director, Richard Lloyd, said:
“In a truly competitive energy market people should be able to spot the cheapest deal at a glance, making it easier to switch supplier.
“It’s encouraging that one of the country’s largest energy suppliers is backing simple pricing. The current energy market investigation is a golden opportunity to put consumers first by introducing simple pricing.”
EDF Energy Managing Director for Customers, Beatrice Bigois, said:
“The market for energy is highly competitive, but it will work better if every customer feels able to make a simple and well-informed choice. Energy companies will have to work together to make price comparison easier and more accurate but the need to find a better way for customers is clear.”
Notes to editors
- Which? and EDF Energy conducted an experiment to understand the impact of energy pricing on consumer behaviour. The experiment was completed by 2,545 UK adults, responsible for choosing their energy supplier(s), weighted to be nationally representative of the UK population. It involved two choice tasks, which simulated the process of choosing a tariff from a price comparison website and a flat table (similar to those that appear in a newspaper). Each respondent was randomly assigned to one of nine different versions of the tasks, each with different pricing and presentation.
- The research will be submitted to the Competition and Markets Authority’s (CMA) inquiry into the energy market and Which? is calling for simple pricing to be one of the inquiry’s key recommendations.
- Simple energy pricing presents each tariff as a unit rate (i.e. £ per kWh) with no separate standing charge. This means that consumers can compare the cost of energy at a glance, without needing to know their consumption – in the same way as petrol price displays.