Thought leadership

 The Energy Advice Line has renewed calls for Ofgem to scrap plans for a tariff comparison rate (TCR) because it is too complex for consumers to use to find the cheapest energy deals.

The call follows the release of a survey by consumer watchdog Which? that found 7 out of 10 people failed to find the cheapest deal using the new TCR system.

Julian Morgan, managing director of the UK’s leading price comparison, switching and advice service for energy users, said a simpler price comparison model was urgently needed.

He said consumers needed to compare the actual price they were currently paying for energy with the best available offer from their supplier.

The TCR system is based on average energy use and is similar to the APR figure used to compare financial services products.

“The problem is that energy prices are much more complicated than interest rates for loan products so using a format similar to an APR doesn’t make sense,” Mr Morgan said.

“Medium energy use, which is what the TCR is based on, just isn’t a good indicator. This measure not only makes it complex to find the best deal, but it could also encourage low energy users, whose consumption of energy is less than average, to opt for tariffs that cost more than they need to pay.”

Mr Morgan said he was concerned at the Which? finding that 55% of consumers had never shopped around to check if it was worth switching energy suppliers, and only 24% had switched suppliers in the last two years.

“Ofgem needs to take the Which? findings on board and change the TCR system for a simpler model so that more consumers feel comfortable comparing energy deals,” Mr Morgan said.

“Switching suppliers is the cheapest and most effective way to keep energy bills low, yet more than half of all consumers are failing to do it.

“The evidence is very clear that consumers who shop around pay less for their energy than those who don’t bother, or who stay ‘loyal’ to the same supplier year-on-year.

“What’s not clear for consumers is how to compare tariffs because the energy companies make it so difficult to do so.

“That’s why independent and reputable price comparison and switching services like the Energy Advice Line are so important. We take the legwork and hassle out of shopping around and we are able to compare like-for-like so customers get an accurate comparison of prices.”

The Energy Advice Line is a consumer champion and an independent price comparison and switching service for householders and small and medium-sized businesses. The service enables consumers to quickly and simply compare electricity and gas prices, and to switch to the best available deal on the market.

The service also offers free advice and a contract management service, including alerts to remind consumers when their fixed-term energy contracts are about to end.

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