Consumer Focus is highlighting today that many energy customers who are on Economy 7 or other ‘Time of Use’ tariffs1 (which have peak and off-peak rates), could be paying more than they need to for their energy. New research2 from the watchdog shows that 38 per cent of these customers don’t have storage heaters and/or do not regularly use appliances at off-peak times. So they get no real benefit from the off-peak tariff and would be likely to be better off on other energy deals.
Hannah Mummery, energy expert at Consumer Focus, said:
‘Hundreds of thousands of Economy 7 customers and those on other deals with off-peak rates are likely to be paying over the odds on these tariffs. Many of these customers don’t know when their off-peak rates kick-in and how to get the maximum savings from their tariff.
‘We need to see much better information and advice provided to these customers by energy firms so people don’t lose out. We’d also strongly advise customers who think they may not be benefitting from their Time of Use tariff to shop around to see whether they could pay less for the energy they use on another type of deal.3’
In Consumer Focus’s new report on Time of Use tariffs – ‘From devotees to the disengaged’ – one of the biggest problems reported by customers is confusion over off-peak times and rates.4 Many people aren’t sure when the cheaper hours are, how much they need to use at off-peak rates to get the benefit of their tariff, and how this compares to their current energy use. Almost six out of 10 (59 per cent) of users think additional information and advice would help them make better use of their tariff and heating system.
Consumer Focus wants energy suppliers to provide better information and advice to consumers on Time of Use tariffs. Consumers need better information on off-peak hours, their electricity use and how to get maximum benefit from their tariff. It is especially important that key information including the off peak hours is provided regularly on customers’ bills and that those who are not using off-peak rates effectively are proactively contacted and given advice by their supplier.Where customers are not benefiting from being on an Economy 7 tariff, we want to see all suppliers offer to bill them as a standard tariff customer or replace their meter. 5
Greater standardisation of tariff structures is essential so consumers can more easily understand how to benefit from these tariffs, compare and switch providers. Currently the different structure of Economy 7 tariffs means the amount of your energy consumption that needs to be used off-peak to make the tariff cost effective, varies widely. For example – with British Gas 45 per cent of consumption would need to be off-peak compared to just 15 per cent for Scottish Power customers.6
It is even more important that the energy industry gets Time of Use tariffs in order now – as a much wider proliferation of these tariffs is expected after the nationwide roll-out of smart meters from 2014. The Department of Energy and Climate Change estimates up to four in 10 customers could be on Time of Use tariffs when smart meters have been introduced.7
Notes to Editors:
- Time of Use tariffs charge customers more during periods of high demand and less at off-peak times – particularly overnight. They are intended to make electricity more affordable for those with electric heating, storage heating or electric water heating, and to spread demand for electricity by incentivising use during off-peak times. In our research Economy 7 customers made up 66 per cent of those on Time of Use tariffs, Economy 10 accounts for 10 per cent and the remaining 24 per cent are on a mixture of protected multi-rate tariffs.
Economy 7 (which charges less over seven consecutive hours during the night) and Economy10 ( which has a cheap rate for early morning, early afternoon and five hours overnight) are the main Time of Use tariffs. Some suppliers also have ‘protected tariffs’ which offer cheaper electricity at certain times. These protected tariffs are not usually open to new customers, they are provided to long-standing customers by the former monopoly provider in their region. See pages 6-7 of our report for more detail.
- Research was conducted by Ipsos MORI on behalf of Consumer Focus across Great Britain in January 2012. Of 5,914 GB consumers surveyed, quantitative research was conducted with 620 customers who used Time of Use tariffs with further in-depth interviews with 15 of the Time of Use customers spoken to.
- The Consumer Focus Confidence Code guarantees accredited energy price comparison sites are independent and impartial, well managed with up-to-date data, help you to find the best deal easily and include information on the widest range of tariffs available. There are 12 accredited sites, nine of which also have a telephone service:
- BeatthatQuote.com: 0845 652 1546 - Energy Helpline: 0800 074 0745 - Energylinx: 0800 849 7077 - Fuelswitch - Moneysupermarket.com: 0845 345 1296 - Simply switch: 08000 111 395 - switchelectricandgas.com - TheEnergyShop.com: 0845 330 7247 - UK Power: 0800 093 2447 - Unravelit - Uswitch: 0800 404 7908 - Which? Switch: 01992 822867
- The most common problems included: uncertainty whether their tariff was correct for them (experienced by 13 per cent of customers); confusion over off-peak times and rates (12 per cent); billing mistakes (8 per cent); and inability to use enough energy at off-peak rates (8 per cent).
- Several suppliers, including British Gas, E.ON and npower have taken up our challenge and have reviewed or will soon carry out a review of their Economy 7 customer base to identify customers who would benefit from being billed as a standard tariff customer. Consumer Focus is urging the remaining suppliers to consider how they can better serve these customers and ensure they get the most benefit out of these tariffs.
- The following table provides the minimum percentage of off peak energy a consumer needs to use to benefit from their suppliers Economy 7 tariff:
Supplier Percentage of off peak electricity usage required to make the Economy 7 tariff more cost effective than a standard tariff British Gas 45% Cooperative Energy 35% Ebico 33% Ecotricity 20 – 35% (depending on the region) EDF Energy 20% – 30% – (varies depending on region and consumption profile) EON 34% First Utility Do not currently offer an Economy 7 tariff Good Energy 15% – 40% (varies depending on region, consumption profile and price rises) Green Energy 20% – Economy 7 LoCo2 19% – Planet tariff13% – Pocket + tariff20% – Pocket tariff npower 35% OVO 30% (some variations depending on region and consumption profile) Scottish Power 15% Spark Energy Do not currently offer an Economy 7 tariff SSE 35% Utility Warehouse 40% (35% for low users)
(Above data confirmed correct June 2012)
- 13 per cent of energy customers surveyed by Consumer Focus were aware they were on a Time of Use Tariff. The actual percentage is likely to be higher as some customers may not be fully aware of their tariff-type. DECC estimates that 19.5 per cent of energy customers are currently on Economy 7 tariffs and that a further 20 per cent will take these up when smart meters are introduced. See DECC’s smart meter impact assessment for further detail.