Which? challenges energy firm's misleading ratesOvo Energy's tariff move will confuse consumers
04 November 2009
Which?'s independent switching service, Which? Switch, has alerted energy consumer complaints body Consumer Focus to plans by new supplier Ovo Energy to change both its tariffs so that new customers pay a different price from existing ones.
Ovo Energy has updated its 'New' and 'Green' energy tariffs with new rates while keeping the name of each tariff the same. Existing Ovo customers will continue to pay their original rate, but new customers signing up to the same plan will pay a lower rate, or a higher rate in the case of Economy Seven customers.
The move means that customers seemingly on the same tariff will be paying different prices, making it difficult for customers to judge whether they're getting the most competitive deal.
This is most problematic for existing Ovo customers when they come to compare energy prices and suppliers in the future, as comparison services would only be able to compare the latest rate - which wouldn't necessarily be the rate they were paying.
Alison Morrison of Which? Switch said: 'In order for consumers to switch their supplier easily, they need to know that the tariff name matches the price that they are currently paying. Multiple variations of tariff rates, under one name, can only lead to greater confusion for consumers.'
Ovo told Which? the intention of its one-name-for-all approach was to make it simpler for customers.
Responding to Which?'s concerns, it said: 'Ovo customers receive a monthly statement which clearly shows their estimated annual consumption in kWhs and their unit price in pence per kWh. With no other discounts or hidden penalties to factor in, consumers can easily compare Ovo’s rates with those of other suppliers. Ovo is committed to simplifying the energy market for consumers.'
But Jenni Lucas from Consumer Focus said: 'The latest issue with Ovo and its price changes goes to further highlight the degree of complexity around gas and electricity tariffs and how difficult it is for consumers navigate this market. With Ovo customers being subject to a range of different prices under the same tariff name there is the potential that they will be unable to obtain accurate price comparisons in the future.'
Consumer Focus has issued a statement to all accredited energy comparison and switching services who have agreed to abide by its voluntary code of practice, the Consumer Focus Confidence Code, and is in talks with both Ovo and energy regulators Ofgem to 'find a solution to this situation'.
Most other energy companies also offer multiple rates under the same energy tariff, but will often issue a new version number to differentiate between different rates - effectively leading to thousands of different energy tariffs on the market at any one time. Which? is campaigning for a simpler approach to billing and tariffs - find out more about our energy campaign.
Dr Fiona Cochrane, Which? energy campaigner, said: 'This move could actually end up misleading consumers instead. Introducing new rates for new customers under the same tariff name is essentially the same as introducing a whole new tariff.'
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