Which? calls for fair energy prices
New Which? research has revealed a shocking lack of trust in energy companies as we launch a new campaign calling for fair energy prices.
Our latest research reveals just one in five people (18%) trust suppliers to charge a fair price for their energy and more than half (54%) say it’s difficult to compare the prices of different energy deals. We also found that just one in six consumers (17%) trust energy companies to act in customers’ best interests, and only a quarter (26%) rate their supplier as good at offering them a fair price.
Energy prices consistently rank as the number one financial concern for consumers, with four in ten (41%) worried about the cost of heating their home this winter. One in four (26%) said they don’t know whether they can afford to heat their home this winter, and only a quarter (24%) believe that competition between energy companies currently drives down prices for consumers.
Along with simpler pricing to help people more easily spot the best deals, Which? believes that consumers need a credible, independent benchmark – a ‘price to beat’ – against which to compare prices. Energy suppliers would compete against this ‘price to beat’, which would be set and regularly updated by the energy market regulator. This would not be a return to full price regulation. It could take a number of forms and similar models already exist in parts of the US and Northern Ireland.
Our new Fair Energy Prices campaign is calling for the Competition and Markets Authority (CMA), as part of its current investigation into the energy market, to:
Investigate the best way for the regulator to establish a ‘price to beat’, so that consumers can trust that the price they pay is fair.
Require energy suppliers to use simple, directly comparable pricing, similar to petrol pump displays, so people can more easily compare prices and make the best choice if they switch.
Richard Lloyd, Which? executive director said:
“Our research shows that the energy market remains at rock bottom for consumer trust. Millions of customers still don’t think they’re paying a fair price and most people find it hard to compare deals.
“Big reforms are needed to restore confidence in the industry and to guarantee fairer energy prices for consumers. The Competition and Markets Authority should now investigate how the independent regulator could establish a price people can trust that will spur suppliers to compete and reassure worried consumers that they’re not being ripped off. Meanwhile, energy companies should use simple pricing to increase confidence in the industry and boost competition by encouraging switching.”
People can support our campaign for Fair Energy Prices at http://whi.ch/F4IR3NERGY
Notes to Editors
1. Populus, on behalf of Which?, interviewed a representative sample of 2,106 UK adults online between 5th and 7th September 2014. Data were weighted to be demographically representative of all UK adults. The questions were just asked to energy consumers, those who have some responsibility for paying their gas or electricity bills, a sample of 1,877 people.
2. We previously found eight in 10 consumers could identify the cheapest energy deal when using simple pricing, such as you would see on a petrol forecourt when buying petrol. Ipsos MORI, on behalf of Which?, interviewed a representative sample of 2,008 GB adults face to face between 3-19th May 2013. Data were weighted to be demographically representative of all UK adults aged 15+. Respondents on an Economy 7 or similar tariff or without a mains electricity supply were excluded. This gave a total usable sample of 1,681 – 882 respondents answered questions on simple pricing.
3. In the latest Which? Consumer Insight Tracker, three-quarters of people (76%) say they are worried about energy prices.
4. The price to beat could take a number of forms, from a reference price to a regulated tariff. As an example of how a ‘Price to Beat’ could work in practice, in the US State of Illinois, the regulator sets an electricity procurement strategy to determine a fair price for the regulated default tariff. This means that it is not the price of the electricity itself that is regulated but the process of buying it. The regulator establishes the amount of electricity required and how far in advance it should be bought. It then invites generators to submit sealed bids to meet demand, effectively obliging them to bid their best price. Consumers in Illinois have a choice of either one electricity supplier whose prices are regulated (known as ‘the utility’) or other suppliers whose prices are not regulated. In one area of the state there are more than 20 alternative suppliers competing with the utility. As in Britain, consumers can choose between fixed- and variable-price tariffs, as well as some green options. The non-regulated prices then must compete against the utility, to gain customers. The regulated tariff provides a benchmark enabling consumers to easily and confidently assess the relative value of other offers.