• 4 million customers have no access to best offers
• Prepayment meters cost £118 more than direct debit
  
• Quarterly cash or cheque payments cost £80 more than direct debit

Announcing the findings of a seven-month investigation into Britain’s energy market, the energy industry regulator, Ofgem, has found no evidence of a ‘cartel’ amongst the big six suppliers, but it warns gas and electricity suppliers to stop charging customers different prices for paying by direct debit or pre-payment meters.

The report highlighted 4 million households that were £55 a year worse off because they couldn’t take advantage of the most competitive offers; households using pre-payment meters being charged an average of £118 more than direct debit customers; and households paying quarterly by cash or cheque being charged an average of £80 more than those who used direct debit.

According to Ofgem, although it found that the market works well for most consumers, many of the most vulnerable customers, including pensioners and low income households, were less likely to be able to make informed choices about tariffs under the current system. Customers not connected to the mains gas grid were losing out too.

The regulator proposes wide-ranging reforms which include a requirement for companies to help all consumers access the best deals and more transparency to show the link between the wholesale price of energy and the price charged to customers. It also wants to stimulate new competition by making it easier and more attractive for smaller suppliers to break into the market, currently dominated by six companies – British Gas, ScottishPower, Scottish & Southern Energy, EDF Energy, Eon and Npower.

Consumers have already been hit by two hefty price hikes this year and energy suppliers continue to blame soaring prices in the global wholesale gas and electricity markets. The recent Which? report on energy suppliers also reveals widespread dissatisfaction amongst customers, the lowest of all industries.

The Ofgem report is therefore likely to receive a luke-warm reception as many will feel disappointed that it doesn’t go far enough to impose its recommendations.

Mini-Post by Alan Potts

Which? magazine has published the results of a membership survey this month with feedback on customer satisfaction for gas and electricity suppliers.

Perhaps unsurprisingly, some of the big names we all love to hate come in for particularly heavy criticism with Scottish Power, E-on, EDF Energy and British Gas scoring less than 50% and the wooden spoon being awarded to nPower with the lowest score of all - a measly 32%!

The survey polled the opinions of 8,694 members of Which? and the responses were split roughly equally, 50% for gas and 50% for electricity.  Member’s complaints centred on poor customer service, poor value for money, inaccurate and unintelligible billing and a general lack of communication.

The best performer turned out to be The Utility Warehouse, scoring 72%, where customers praised their customer service, telephone support and accurate billing that was easy to understand.  The Utility Warehouse also scored well for value for money despite the fact that it doesn’t necessarily offer the cheapest deals around.  The company claims its prices are in line with the average cost of direct debit gas and electricity tariffs in each region.

BUYability is currently in the process of reviewing a broader range of (15) utility suppliers and the results will be published on this web site later next month.  It will be interesting to see how the Which? survey results compare to our own research. 

In the meantime, as the cost of energy goes up, customers will become much more sensitive to the perceived value they get from their energy supplier in return for their hard-earned cash. The energy companies will need to improve dramatically on these abysmal satisfaction results if they are going to keep existing customers happy.  Thankfully, it is so easy to switch supplier nowadays and the unhappy majority will no doubt be able to vote with their feet.

Well done to The Utility Warehouse.  Long may the queue of new customers at your door be the reward for all your hard work! 

Mini-Post by Alan Potts