Help households struggling with high energy bills by offering a single tariff, energy companies advised
New IPPR research shows that consumers struggle to take control of their energy costs because they don’t understand their energy bills
Simplified energy bills with a single tariff would help consumers understand their energy use and take control of their energy costs, according to a new report published today by IPPR, the progressive policy think tank.
The report argues that whilst the number of consumers has gone up, not enough are switching to get the best deal from the market. Last year, only 15% of customers changed gas or electricity suppliers. Of the large numbers of non-switchers, 51% had never switched energy provider before.
For many consumers, their energy bill is still too confusing and packed with jargon - with tariffs that are hard to compare with other deals in the market. The report recommends a drastic simplification of bills to drive greater consumer engagement. And as smart meters are rolled out (~2020), it recommends the introduction of a single tariff for each energy company. A single tariff would allow energy companies to compete directly with each other on price and make it easier for consumers to decide what supplier to use, and when they should switch.
IPPR has also designed a new template for a simpler energy bills using research from consumer respondents who said that the following elements would be essential on an easy-to-understand bill:
- What is the amount to be paid this month (period)?
- What did I pay last month (period)?
- Important numbers (customer services and the account number)
- Who do I call in an emergency? (Emergency contacts)
Hywel Lloyd, IPPR Associate Director, said:
“Energy prices are once again making headlines. As some suppliers raise their prices, commentators highlight the challenge facing any government to ensure the ‘market’ for domestic energy is fair, transparent and giving customers a good deal. Meanwhile, political parties have made manifesto pledges to act.
“But as the economy continues to fail to deliver shared prosperity there is a real urgency to making energy bills easier to understand so that consumers can make the most of opportunities to get a better deal. With so many people on standard tariffs or yet to switch, simpler bills are a part making consumers more engaged with the amount they are paying for energy. In future each energy company having a single tariff will ensure a fairer deal for the great majority of consumers”.
Sofie Jenkinson, 07981023031, [email protected]
1. Keep it simple: Energy bills made easy will be available online at https://www.ipprg.org/research/publications/keep-it-simple
from 00:01 Thursday 21st September 2017. An embargoed copy of the publication ‘Keep it simple: Energy bills made easy’ is available on request – please email [email protected]
2. IPPR aims to influence policy in the present and reinvent progressive politics in the future, and is dedicated to the better country that Britain can be through progressive policy and politics. With nearly 60 staff across four offices throughout the UK, IPPR is Britain’s only national think tank with a truly national presence.
Our independent research is wide ranging and covers the economy, work, skills, transport, democracy, the environment, education, energy, migration and healthcare among many other areas. Find out more at www.ippr.org.
3. The simple bill design above was made using the observations of the two focus groups, their views of ‘essentials’, desirables’ and a consideration of the wider context of what communications could play a role in engaging consumers, the following idealised bill emerges. IPPR recommend that a simple bill of this nature would make accessing, understanding and potentially even acting on information simpler for many customers.
4. IPPR would like to thank www.comparethemarket.com for the support and funding that made this briefing paper possible.