- Wednesday, 10 October 2012
Consumer Focus is highlighting today that many energy customers who are on Economy 7 or other ‘Time of Use’ tariffs (which have peak and off-peak rates), could be paying more than they need to for their energy. New research from the watchdog shows that 38 per cent of these customers don’t have storage heaters and/or do not regularly use appliances at off-peak times. So they get no real benefit from the off-peak tariff and would be likely to be better off on other energy deals.
Hannah Mummery, energy expert at Consumer Focus, said:
‘Hundreds of thousands of Economy 7 customers and those on other deals with off-peak rates are likely to be paying over the odds on these tariffs. Many of these customers don’t know when their off-peak rates kick-in and how to get the maximum savings from their tariff.
‘We need to see much better information and advice provided to these customers by energy firms so people don’t lose out. We’d also strongly advise customers who think they may not be benefitting from their Time of Use tariff to shop around to see whether they could pay less for the energy they use on another type of deal.
In Consumer Focus’s new report on Time of Use tariffs – ‘From devotees to the disengaged’ -one of the biggest problems reported by customers is confusion over off-peak times and rates. Many people aren’t sure when the cheaper hours are, how much they need to use at off-peak rates to get the benefit of their tariff, and how this compares to their current energy use. Almost six out of 10 (59 per cent) of users think additional information and advice would help them make better use of their tariff and heating system.
Consumer Focus wants energy suppliers to provide better information and advice to consumers on Time of Use tariffs. Consumers need better information on off-peak hours, their electricity use and how to get maximum benefit from their tariff. It is especially important that key information including the off peak hours is provided regularly on customers’ bills and that those who are not using off-peak rates effectively are proactively contacted and given advice by their supplier. Where customers are not benefiting from being on an Economy 7 tariff, we want to see all suppliers offer to bill them as a standard tariff customer or replace their meter.
Greater standardisation of tariff structures is essential so consumers can more easily understand how to benefit from these tariffs, compare and switch providers. Currently the different structure of Economy 7 tariffs means the amount of your energy consumption that needs to be used off-peak to make the tariff cost effective, varies widely. For example – with British Gas 45 per cent of consumption would need to be off-peak compared to just 15 per cent for Scottish Power customers.
It is even more important that the energy industry gets Time of Use tariffs in order now - as a much wider proliferation of these tariffs is expected after the nationwide roll-out of smart meters from 2014. The Department of Energy and Climate Change estimates up to four in 10 customers could be on Time of Use tariffs when smart meters have been introduced.