"Deliberately confusing" energy bills cost households

Press Association
energy efficient cfl bulb on...
energy efficient cfl bulb on...

The "deliberately confusing" bills provided by energy companies are the biggest barrier to consumers switching between suppliers, according to a study.

Confusing tariffs and badly presented billing information is stopping households from getting the best deal on their energy, the report by the CentreForum think-tank for comparison site comparethemarket.com claims.

The report warns that switching rates have been in decline since 2012 despite efforts by the government and regulator Ofgem to make it easier to change supplier.

Despite identifying general barriers to switching such as a lack of internet access, CentreForum concluded that the biggest problem facing energy customers was the "deliberately confusing way that suppliers present information".

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Evidence suggested that consumer bills were too complex and tariff descriptions were "buried in cryptic terminology, making like-for-like comparisons extremely difficult".

CentreForum said the "confusopoly" prevented effective competition in the energy market and led to customers being "ripped off".

The think tank said it supported the Retail Market Review led by Ofgem but called for the new Tariff Comparison Rate (TCR) to be scrapped - or better communicated - on the basis that it could be "misinterpreted as an accurate comparison tool for all consumers" rather than the average customer.

It also called for a standardised Tariff Information Label, set out on a single page, to allow consumers to make faster and more informed choices about their supplier.

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The report's author and associate director for economic policy at CentreForum, Tom Papworth, said: "The obfuscatory way that information is presented by energy companies acts as a significant barrier to switching supplier.

"Customers frequently complain about receiving too much information and having too much choice, rather than too little. Bills are complex and like-for-like comparisons difficult.

"An overhaul of some of Ofgem's Retail Market Review recommendations as we suggest would therefore clearly benefit consumers."

Comparethemarket head of energy James Padmore said: "The report underlines the fact that the energy market is broken. Consumers struggle to make sense of energy bills and too many remain on uncompetitive tariffs because they are unsure of how to compare deals based on their current usage and expenditure.

"We estimate that if everyone moved to the best energy tariff for them, the 'energy dividend' back into the pockets of UK consumers would be in the region of £4 billion - an indication of the overpayments caused by automatically rolling on to standard tariffs and not reviewing bills.

"Consumers need to be able to compare tariffs like for like and make informed decisions about the best deal for them. The report we have commissioned clearly shows that, at present, the energy industry falls woefully short of this requirement."

Energy bills on AOL

£31,000 gas bill for one bedroom house

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