One step closer to transparency
As we come to the end of 2016, there’s some refreshingly good news from the energy regulator, Ofgem. They’ve published their first energy company league table to “increase transparency on the numbers of people on expensive standard variable tariffs.” This represents a big step in the right direction towards more transparency in the energy industry. All suppliers are required by law to have a default tariff that has variable prices that go up and down with the market, commonly known as their ‘Standard variable tariff’ (SVT). The problem is that millions of people are stuck on expensive SVTs when they could be on a cheaper tariff with their existing supplier or saving hundreds of pounds by switching. People don’t know when deals are available, and most importantly, they don’t know the difference in cost between the tariff they’re on and the other deals on offer.
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We’ve been banging on about the lack of transparency around SVTs for ages - we wrote a blog about it earlier this year - so this move by Ofgem gets a big thumbs up from us.
What does the data show?
Looking across the suppliers included in the league table there are almost twenty million customers on standard variable tariffs (19,833,112). Considering Ofgem figures have indicated there are just under thirty million energy customers in the UK (29.54m), that means almost two-thirds of people could be getting a better deal.
70% of the suppliers in the league table have more than half of their customers on standard variable tariffs. And there are some (SSE and Utility Warehouse) with over 90% of their customers on an SVT. On average, the difference between the SVT and the best deal on offer at the same supplier is £142.
So to be clear, that’s millions of customers that could be saving hundreds of pounds. In fact, according to this Ofgem data, there are potential savings of over two trillion pounds (£2.4t).
Wait, where’s Bulb?
Bulb isn’t represented on the league table as it only shows the Big 6 and other similar sized traditional suppliers. But we wouldn’t be represented anyway because we just have one tariff so there is no difference between our SVT and our cheapest deal. Basically, we’re in a league of our own.
Well, not quite. There are a few suppliers that only have one tariff too: Good Energy, Ecotricity, Utilita and Ebico.
A single tariff means for our members there is no ramping up the cost of energy and they’ll never be moved from one tariff to another. So, everyone at Bulb always knows they’re on our best deal.
We’d like to see more of this kind of transparency. What about doing the same thing for all suppliers, not just the large ones? We’d be happy to be included and we bet others would be too.
And we believe small business customers would benefit from the same level of transparency. We think brokers should publish the commission they make when they procure electricity and gas rates from suppliers for businesses. Too often, this kind of ‘broker tax’, means small and medium-sized businesses are getting overcharged for their energy. Ofgem should require brokers to publish their commission rates. After the creation of the SVT league table, we know they have the capacity to act in favour of transparency. They should do it more.
Are there other areas of the industry you think would benefit from greater transparency? Let us know in the comments below.
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