Does today (1 July 2010) mark another transformational change in the UK energy market?
We think so.
From today, new license conditions will require energy suppliers to provide not just clearer bills, but also annual energy statements. And it is the annual energy statement that is getting us excited.
Between 1 July 2010 and December 2010, energy suppliers will have to send to each customer an annual statement telling them the name of their current tariff, their annual energy consumption (in kilowatt hours) and to provide an indication of how much they are likely to spend on their energy over the next year based on current consumption and current prices.
Why is something as basic as an annual statement potentially so important?
In the opinion of TheEnergyShop.com it is because, for the first time, consumers will have all the information that they need, on a single piece of paper, that will allow them to make a proper and informed assessment of how much they are actually paying for their energy, and how much they can save by switching.
This may sound a little exaggerated but consider the following. Ofgem’s research in their energy market probe in 2008 found that;
- The majority of customers find the number of energy tariffs confusing.
- The majority of customers think it is hard to work out IF they could make a saving (let alone how much can be saved).
- Less that 30% of customers bother to do any kind of comparison before switching.
Regarding the confusion, we are not surprised. We’ve been running energy price comparison sites for 10 years now and we have to say that even we find it confusing.
- British Gas has 6 versions of Click Energy and 8 versions of WebSaver.
- E.ON has 5 versions each of Energy Discount and Track and Save.
- npower has 15 versions of Sign Online, 11 of which are identically priced.
Does that make any sense? We thought not.
The number of tariffs may not change as a result of this (we hope it will), but it will take a lot of confusion out of the marketplace.
In the meantime, the gap between wholesale and retail gas prices continues to close. Not enough to risk a rise in energy bills for customers on Standard tariffs, but certainly by enough to see the cheap discounted energy tariffs disappearing. Expect more discounted tariffs to be withdrawn in the coming days.
What we think:
For the first time, the annual energy statements will allow consumers to cut through all the confusion in the energy market, and give them the real distilled information that they need, to work out what they are using, what they are paying and to allow them to make proper comparison of what they can save.
What is just as important to know, is what is NOT going to be on the statement. Energy suppliers will not be telling you that you can make a saving of around £200 a year just by moving to a cheaper deal, even with the same supplier. You will need to do the comparison yourself, and as soon as you get your statement, that is the first thing you should do.