'Lack of trust' prevents customers from getting better energy deals
Citizens Advice has said there is a “crisis of trust” which is stopping people from obtaining the best energy deals.
Research published today by the Smart Meter Central Delivery Body (SMCDB) paints “a picture of consumer mistrust, confusion and anxiety" towards the energy industry.
The study found that 41% of people were concerned that they were paying more for gas and electricity than they actually consume, and just over half (51%) did not trust any energy supplier.
Payment worries
Over a third (36%) of all respondents said that they didn’t understand their energy bill, and 37% were concerned that their bills aren’t accurate.
The survey also found that 43% said they didn’t think they had enough information to choose the right energy tariff, and 39% said they didn’t have enough information to choose the right energy supplier.
The general lack of trust was higher among more vulnerable groups: 57% of respondents with a disability and 57% of those in fuel poverty said they didn’t trust a single supplier.
“Years of poor treatment means the loss of trust in energy firms cannot be rebuilt overnight," commented Gillian Guy, Citizens Advice Chief Executive. "The investigation into competition in the energy industry is long overdue.”
Households are struggling to cope
Gillian Guy says there is a “crisis of trust in the energy industry", coming at a time when households struggle to cope with energy costs “which have gone up seven times faster than earnings since 2010”.
One in five people, she says, are falling behind with their energy bill payments, but the lack of trust in the industry as a whole is acting as a “barrier" to getting a better deal. Participants in the study had an average annual bill of £1,100.
Sacha Deshmukh, Chief Executive of the SMCDB, commented that “antiquated systems for recording energy use are no longer fit for purpose. Households need to be able to take control of their energy use and bills.”
He suggested that smart meters would enable us to do just that. The study claimed that 84% of respondents were aware of smart meters, and just under half (44%) were interested in having one installed in their home. Among those with smart meters already installed, the proportion saying they didn’t trust their energy supplier dropped to 30%.
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Smart meters
A smart meter sends energy consumption readings to your energy supplier automatically, so that you pay the right amount every month, rather than the current system where energy suppliers sometimes estimate bills when they don’t have a meter reading.
You can keep an eye on how much energy you’re using with the in-home display on your meter.
They will be installed in every home for 'free' by 2020 under Government plans, but we will ultimately foot the bill, as the cost of the meters will be passed on through our energy bills.
There are concerns about both the cost of smart meters and the information they will collect.
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Can a relationship of trust between energy suppliers and consumers be restored? Are smart meters the way forwards? Let us know what you think in the comments below.
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Comments
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Good advice from mikecunliffe & Overtone. I already do this and compare prices every year, which has resulted in me using 5 different companies in the last few years; currently Ovo who are difficult to beat for a low user like myself. One additional point to consider is, has there been any changes in your lifestyle in the last year which may impact on your energy usage. A new baby or caring for elderly relatives could make a difference. Was the last winter particularly cold ( or mild ) ? When I select the cheapest deal for myself, based on my usage over the last twelve months, I check to see if it would still be the best deal if my usage was, either 10% higher or 10% lower. If so, go ahead, if not further consideration needed.
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Totally agree, Ofgem's message to those whom are careful is "So What?" We, Ofgem have allowed the suppliers to get their costs covered before they have even supplied a single kilowat by re-introducing daily standing charges......................VERY VERY UNFAIR. Even when you give regular monthly readings the suppliers do not always use them, they put there own fictitious figures in and are allowed to steal from your Bank through the Direct Debit system. Ofgem still need to look as though they are on the side of the consumer but as always they play for the suppliers, until we get a proper policing of this industry it will remain a free and easy ride for the suppliers. Windfall tax them all.
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There is also lack of trust with Ofgem. They have done a great disservice to low users by insisting on re-introducing a separate standing charge which has increased the cost for many consumers. Worst of all there is such a great disparity in the standing charges as to negate any worthwhile competition - this can not only be seen but calculated too. There is not rhyme or reason for the large differences in the standing charges and I suspect that Ofgem are aware of their error. It is obvious to all that energy companies are going to exploit any and every loophole that they can find. Trust ? How can you reconcile trusting any company, who's sole purpose is to maximise profit, to fair and reasonable tariffs ? Regarding the confusion in understanding energy bills, I wonder if the area of confusion was ever pin-pointed and/or analysed. Electricity bills are relatively easy to understand but not gas bills. The additional calculations required make it very hard to estimate usage and cost. Surely it would have been wiser to find ways of simplifying gas rates ?
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11 June 2014