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Consumers 'can't find best deals'


By Matthew Gibson

The introduction of simplified energy tariffs are "a step in the right direction", according to a consumer body.

But more work needs to be done after a recent study found only a third of potential customers were able to choose the cheapest deal.

Which? presented a group of consumers with a number of different offers and asked them to identify the deal that provided the best value.

Only a third managed to do this successfully despite the new rules from Ofgem coming into effect enforcing standardised tariffs.

Two-thirds unable to spot best deal

The consumer group challenged consumers to find the cheapest deal using the standard tariffs of the big six energy firms - British Gas, EDF, E.ON, Npower, Scottish Power and SSE.

But two-thirds of those taking part in the study were unable to spot the best deal.

Just over a third (35%) made the right decision when the tariffs were presented in line with Ofgem's new Retail market Review (RMR) structure, comprised of a unit rate and standing charge.

Slightly less than a third (31%) opted for the incorrect tariff and the remaining 34% either did not believe it was possible to make such a calculation or were unaware of how to do it.

Just over two-fifths (41%) used an aid like a calculator or a spreadsheet to help them with their decision-making process, but only half got their calculations right.

'People still baffled'

The RMR structure is an improvement, according to Which?, but "our latest results show that the majority of people are still baffled", it added.

The watchdog ran a similar test in 2012 when only 8% were able to select the cheapest deal using the previous type of energy tariffs.

Four-fifths (81%) plumped for the lowest-priced deal when they were provided with the tariffs in the simple pricing format of a unit rate and no standing charge.

In this instance, just 8% picked the incorrect tariff and 10% did not believe it was possible to calculate or were unable to do so.

Ofgem to introduce Tariff Comparison Rate

Ofgem is also introducing an additional system of presenting energy tariffs called the Tariff Comparison Rate (TCR), which shows tariffs based on what a typical energy user would pay.

This is aimed at encouraging low and high users to search for cheaper deals.

Which? found that just 8% of the 1,515 energy bill-paying adults questioned understood the TCR display easily.

Which? executive director Richard Lloyd said: "In spite of Ofgem's tariff reforms to simplify the market, consumers are still failing to spot the cheapest deal because energy pricing remains too complicated.

"More radical changes are needed to fix the broken energy market."

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