Simplified energy tariffs ‘still too confusing’

The majority of people still find energy tariffs confusing, according to an investigation by Which?

The study by the consumer watchdog revealed that only one third (35 per cent) of people were able to pick out the cheapest energy deal when they were presented with them in line with Ofgem’s Retail Market Review (RMR) reforms, made up of a standing charge and a single unit rate.

A total of 31 per cent picked the wrong tariff, while 34 per cent said they did not think it was possible to calculate what the cheapest deal was, or did not know how to work out the best value tariff.

A similar test in 2012 revealed that only 8 per cent of people were able to choose the cheapest energy tariff but Which? said while there has been an improvement the latest results show “the majority of people are still baffled”.

Richard Lloyd, Which? executive director, said: “In spite of Ofgem’s tariff reforms to simplify the market, consumers are still failing to spot the cheapest deal because energy pricing remains too complicated.

“More radical changes are needed to fix the broken energy market.”

These changes for part of the consumer watchdog’s “Fix the Big Six” campaign which calls for: increased competition; transparent wholesale trading; seven day switching and simpler pricing; controlling cost added to bills, including the freeze or removal of the carbon floor price; an improvement in the levels of customer service; and an overhaul of the Green Deal.

Trade association Energy UK said it was pleased the survey by Which? showed an increase in consumer understanding and that the RMR reforms are “a welcome sign we are moving in the right direction”.

In a statement, Energy UK added: “The RMR is the latest stage in improving customers’ experience with their energy companies and is making the industry clearer and easier to understand.

“But it is also an ongoing process with more reforms still to come. As we continue to work through the reforms, constructive feedback is helpful so we can improve the information we provide.”