“Do you want to receive marketing information?”

The real scandal with the energy industry that means you’re paying 10% more for your bills.

So Eon are in the press, fined £12m for having miss-sold new deals to customers over a 3 year period. This is bad and well done Ofgem for standing up to one of the largest providers. The problem is I don’t think we have got to the heart of the problem in the energy industry. Eon’s miss-selling affected the minority of customers that moved to Eon over that period. The real scandal affects the majority of customers that stay loyal and don’t move. It is a combination of them being able to run multiple tariffs for the same utilisation levels at the same time; and a liberal interpretation of marketing legislation — they are all using this to leave existing customers on more expensive tariffs whilst marketing cheaper tariffs to new ones.

I’ve not changed Gas & Electricity provider for a few years. At the latest direct debit price hike by EDFenergy I took two minutes on u-switch to discover I could be saving £210 a year on our bill, 13.1%, by switching to OVOenergy. What I wasn’t expecting was to discover was that most of it was down to a choice I’d made when I first signed up.

After I’d kicked off the switch my existing provider emailed me to say I should call to discuss why I wasn’t happy. So I did and without taking any more information than they already had they said that if I changed onto a different tariff with them I could save £125 a year, so 2/3 of the difference between them and the new provider?!

When I suggested they had my email address and could have told me about this new tariff at any time, they told me that they can’t market to me as I’d elected not to receive marketing information when I first signed up?!

Seriously?! I’d speculate that most people think the check box is there because regulators have forced companies to give the customer the choice to not hear about different products and services. Not as a shield for companies to hide behind in not telling customers that they have a replacement service that is cheaper!

Now I might be reading between the lines here too much, but it sounds to me like the following has happened:

  1. The government leans on the regulator to lean on the power companies to simplify tariffs and make everyone aware of the cheapest tariff.
  2. The power companies say they are complying then only contact the 5% of people who elected to receive marketing information. Of course they don’t notice as it is lost in a slurry of emails.
  3. The regulator then thinks they have complied.
  4. The marketing side of the business is then busily creating new tariffs for new customers that are available to all, but not marketed to the 95% thanks to the email check box loophole and they just hope too many don’t notice themselves.

I could have saved 7.8% without changing provider.

The real scandal is the fact that providers can have two different customers using a service equally and paying two different amounts. Ofgem’s attempts to simplify tariffs to the two amounts stated above, in combination with the marketing loophole, have actually made this problem worse. I think they should instead force providers to have only one tariff in a utilisation band — i.e. between 3000 and 4000 kWh you pay X standing charge and Y unit rate. This would stop this whole situation dead. Any changes in prices for new customers would have to affect all.

You could argue the same applies to say mobile phone providers too.

What we have at the moment has to stop. It is a bit like Tesco adding a 3-for-2 promotion on orange juice and only giving you the discount at the till if you point out to them that you have seen the offer as you walked round the supermarket. Which everyone would agree would be pretty cheeky.

The sad reality is I’m savvy, and watching these things. How many OAPs are currently being overcharged by these simple “slights of hand” from the power companies? Ed Miliband, why aren’t you talking about this? Freezing energy prices won’t make a blind bit of difference.

Tip of the day, get u-switch to watch your tariff across all providers.