Energy Companies Blocking Price Comparison

We tell you about a tactic that energy companies use to block price comparisons. Also, read more on the future of energy prices, and what tariffs to pick.

When energy providers announce price increases, the effective date is often in the future, perhaps a few weeks or a month later. Energy-comparison websites change the tariffs as soon as the price changes are announced, rather than wait for the changes to take effect. This is the best way for us consumers, as we'll only pay the old price for a week or two at most.

The problem is, sometimes providers are slow to reveal what the new prices are going to be for their cheapest tariffs. This means that the prices that you are quoted for the table-topping tariffs are sometimes out of sync with the rest. 

Florian Ritzmann (a name you may recognise by now) of Xelector says that the suppliers that are doing this are manipulating Energywatch's energy comparison code of conduct, called the Confidence Code. All the suppliers have to do is insist that the comparison tools continue to show all of their tariffs. The tools are obliged to do so, even if the tool administrators know that a particular tariff will become more expensive soon.

What happens then is that many customers read that a supplier has put up its prices. They check comparison tables and see that supplier is still at or near the top of the table, despite the increases. 

However, the supplier has only increased the prices of its standard tariffs, which almost invariably huddle around the bottom of the table. After thousands of people have switched incorrectly, the suppliers then increase the prices of the cheaper tariffs, but a lot more quietly.

The biggest offender is British Gas, which remains at the top of the table for most searches, and yet its cheapest tariff, 'Click 5', is still due an increase, which will surely happen.

The Confidence Code currently doesn't inspire 100% confidence. We've beaten this tactic for now though. Xelector last week added a Price Rise Risk column to the results table in all energy comparison searches through The Fool. A red light means the price is likely to change for the worse in the near future.

Just so you know, in addition to British Gas' cheapest tariff, Spark Energy and Ebico also still need to update their prices, and let consumers and comparison services know. Don't forget to take notice of the Price Rise Risk sign in the comparison results table.

The future of energy prices

Other than those tariffs, all the other changes for this round are in, and the leading tariffs have shuffled around significantly. However, all sources of information point to more price rises to come. 

Ritzmann's view is that it will be electricity that sees the next big rise. 40% of electricity is generated from gas, so there is a delayed effect where gas-price rises later hit electricity prices. It's likely that we'll see a 15-20% increase in electricity prices and a 10% increase in gas within the next six months.

Ritzmann says: 'Barring an international political crisis, home energy prices can only really stabilise at the very end of next year, with a realistic possibility of price falls in 2010. And if 2007 (the last year of price falls) is anything to go by, a price fall means that suppliers roll back the last price increase only (and then trumpet it loudly). Given that there will be one more price increase at least in 2009, that means the current high level of prices is here to stay for good.'

Ritzmann favours taking the capped deals which are on offer at the moment, as they're pretty reasonable, even if they're not as great as they were a few months ago. They certainly make it easier to plan your long-term budget. However, it may not work for you: you need to do your own energy comparisons.

I mentioned my concerns about capped deals in a recent article. The initial higher price that you pay might easily offset any gains you make in the future. My own preference is to stay flexible: search for the best deals now, and again in another six months.

Whatever you do, you must decide now if you haven't switched for a while. Pick a deal. If it's capped, you won't need to switch for some time. If it isn't, you'll need to compare again in six months after the next round of price hikes.

> Compare gas and electricity prices via Fool.co.uk