The Governance Partnership > A.O.B.
A.O.B.
Now is the winter of our discontent, power company pariahs
Published: 08 December 2011
The Governance Partnership reckons that too many British politicians are too busy playing world statesman to bother minding the store. The ‘store’ is now costing voters and taxpayers dear. One example, says TGP Associate and distinguished editor and writer on financial and consumer affairs and regulation Margaret Stone, is that British business is getting away with shoddy customer service on the cheap. In this, the first of a series of AOB blogs on the wretched state of customer service, Miss Stone targets gas and electricity suppliers.
Thanks be for a mild Autumn and because Winter is only beginning to bare its teeth. According to a leaked report from Consumer Focus, published in the Guardian [2 Nov], it hasn’t stopped some 5 million households falling into fuel poverty, but imagine how much more dire the figure would be if the weather had been severe.
Fuel poverty – when £1, or more, in every £10 of one’s income has to be used to provide adequate heat and light – is shocking. Blame all the obvious culprits – the inexorable rise in energy costs worldwide and the feeble response of David Cameron and his Ministers to the massive price hikes by the energy companies.
But there is section of the community which the six leading energy companies have dragged, needlessly, into the fuel poverty trap. The energy companies’ wilful complexity in both their published tariffs and individual fuel bills may be to their profit but is to the loss of the many gas and electricity customers who haven’t a clue about how their energy bills are calculated. Few are able to read the runes which pass for the energy companies’ tariffs, and so can’t shop around for a better deal elsewhere.
What is needed is simplicity, simplicity and more simplicity in our domestic energy bills. You know it, I know it and so does Chris Huhne, the Energy Secretary, Lord John Mogg and Alistair Buchanan, respectively Chairman and Chief Executive of Ofgem [Office of the Gas and Electricity Markets], uSwitch and even British Gas’s very own consumer panel, a group with a one-off mission which British Gas, to its credit, has now made a permanent listening post for the company.
On this topic, the British Gas Panel went straight to the point. ‘Some customers are falling into fuel poverty. Simpler bills would allow them to assess and manage their energy usage more easily.’
The appalling intricacy of the current charging structure in domestic energy market was highlighted in Ofgem’s call in October for radical reform of that market to replace the 400 tariffs currently bewildering the customer.
The British Gas paper shows two diagrams. The first, lists the information customers currently need to work out the cheapest standard tariff: it is a complex cell structure involving no fewer than 12 links including consumption, discounts, consumption thresholds, standing charge, unit rate and different tariff rates.
The second, two-point diagram illustrates Ofgem’s recommendation is that all customer should need to know to work out the best deal for them is, the standard tariff plus the unit charge. When its proposal was tested, 85 per cent of consumers were able to identify the cheapest deal in less than a minute. For vulnerable customers, the score was 76 per cent.
What is needed now is action, and concerted action. The energy companies vie with banks as the most unpopular corporate entities in the country and, belatedly, recognise this. Individual actions are not enough. They need to take joined-up action so that Ofgem’s proposals to simplify everyone’s energy bills, backed up by enforceable conditions, can come into force ASAP, and certainly by next winter.
Margaret Stone is an Associate of The Governance Partnership and while editing Enterprise Money Mail ran its 'Save Our High Street' campaign.