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Energy personal projection

My energy personal projection plan

In 2014, Ofgem made a number of changes to help clarify the information consumers are given about their energy costs

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Personal Projection was one of those pieces of information and, in this uSwitch guide, you’ll find information about how personal projections are calculated, when you can expect to come across them and how you can use them to find a better gas and electricity deal.

Personal projection and the Retail Market Review

To fully understand how this new tool came about, it helps to consider how it fits in to Ofgem’s Retail Market Review (RMR).

As the regulatory body overseeing domestic energy, Ofgem launched a review of the market with the aim to pinpoint and rectify what was creating a complex and confusing market in which consumers were very disengaged.

More than three years later, in Spring 2014, several new requirements were placed on both suppliers and energy switching sites, including providing a way for customers to understand what their energy costs would be in the coming year — i.e., their 'personal projection'.

What is personal projection and and how is it calculated?

Simply put, a personal projection is a calculation of your future personal energy costs over the next 12 months.

Personal projection calculations are based on your current energy plan and its prices, including any known future price changes affecting that plan — for example, when a price rise has been announced but will not take effect for several weeks.

Personal projections and fixed plans

If your plan has an end date (e.g., you’re on a fixed price plan), your personal projection will also factor in what your energy costs will be changed to once that fixed plan ends and you are rolled on to a different plan.

It’s worth keeping in mind that those with a plan end date will have a fluctuating personal projection figure due to the fact that this number is a blend of the remaining days or weeks on their current plan, and the amount of time they will be on the new plan in the following 12 months.

For example, let's say you are on a fixed plan that ends 31 December 2014. In June, your personal projection may be £900 for the next 12 months. However, in September, your personal projection will be considerably higher — perhaps £1,200 — because you have less time remaining on the cheaper fixed plan, and more time on the more expensive plan you will be rolled on to.

energy personal projection for fixed plan customers

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How is personal projection used in the market?

Another new requirement of gas and electricity suppliers is to display information on customers' energy bills about cheaper energy plans available to them.

This 'cheapest plan for you' information is calculated using your personal projection. However, it is important to note that this will only be the cheapest deal your current supplier can offer you — not the cheapest deal on the market.

You should still shop around for the best energy deal using an accredited price comparison website such as uSwitch.

When you do run a full-market energy comparison, you’ll find personal projections are also used on price comparison sites as well. However, because of the fluctuating nature of personal projections as mentioned above, the figure on your bill and the figure on the energy comparison site may not match up. But, as long as you are on an Ofgem-accredited site, you can trust that their information will be accurate.

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How to use your personal projection to shop around for a better energy deal

You don’t need to know your personal projection in order to run an energy price comparison (this will be calculated for you by the website), but you do need certain information to ensure you get the most accurate comparison for you.

Aside from your postcode, current supplier and plan name, you may be asked to provide, if applicable, your plan’s exact end date.

As mentioned previously, your plan end date can greatly impact your energy costs in the next 12 months. In most cases, this is a fixed date that will be attached to your current plan but, in some cases, this date is set as '1 year from sign up' and so will depend on when you signed up for the plan. If you know this date, your gas and electricity tariff comparison will be as accurate as possible. In either case, if you're unsure your plan's end date, it can be quickly found by checking your energy bill.

Why is the personal projection figure on my bill different than my online comparison figure?

If you've done an online energy comparison and find that the personal projection figure you are given differs from the one on your energy bill, there are a few different factors that could be responsible.

The likely cause for differentiation between the projection on your bill and elsewhere could simply be down to time and the kind of tariff you're currently on.

As mentioned above, if you are on a fixed plan with an upcoming end date, your projection takes into account the time you have remaining on your fixed plan, and the time you will be on the roll over plan over the next 12 months. That means this projection will change daily, getting higher and higher as you will be on the cheaper fixed plan for fewer days, and the more expensive plan more days.

Also, while Ofgem conceptualised changes such as personal projection and TCR, in some aspects of implementation, it is up to the market to choose how to implement them.

So, while calculating your personal projection, some comparison sites and suppliers may include seasonality (i.e., how your energy use naturally changes in the colder winter months), and some may not.

Criticism of personal projection

As mentioned in the Personal projections and fixed plans, the method assumes a customer does nothing, therefore the more expensive rollover plan is included in the calculation of that customer’s spend over the next 12 months.

This assumption led to criticism from both savvy consumers and consumer protection groups, which claimed this method led to a misleading comparison and even an inflated savings figure.

uSwitch took such feedback on board and, in 2016, introduced a secondary calculation option so that customers could compare future costs using their current plan’s cost only.

Personal projection changes in 2016/2017

In July 2016, the Competition and Markets Authority (CMA), its proposed remedies for the energy market following a two-year-long investigation regarding competition from suppliers and customer engagement.

It was the CMA’s conclusion that some elements of Ofgem’s RMR rules, such as the four tariff rule, reduced suppliers’ ability to provide innovative tariffs. By recommending the four-tariff rule be removed to open up tariff innovation, the prescriptive personal projection calculation model will need to be addressed.

Ofgem has released a statement that amendments to the RMR are now being considered, though it is looking likely that the personal projection model will change to accommodate a wider range of tariffs in the coming months.

Read more…

Retail Market Review (RMR) Everything you need to know about Ofgem’s RMR

Tariff Comparison Rate (TCR) How to use it to work out if you’re on the best deal

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