Six in ten (60%) consumers admit they don’t understand their energy bill
Energy suppliers are voted the worst offenders for providing confusing bills****
Despite Ofgem reforms designed to make energy bills easier to understand, almost half (48%) of consumers haven’t noticed any difference
Under the reforms, suppliers must provide information about the cheapest tariff available, yet over half (51%) of consumers can’t recall seeing this on their bill
Uswitch.com is urging Ofgem and suppliers to push forward with new plans to simplify overcomplicated energy bills.
A staggering six in ten consumers (60%) admit they don’t understand their energy bill, according to a new survey by Uswitch.com, the independent price comparison and switching service.
Customers vote energy suppliers the worst offenders for sending confusing bills, coming behind those including water companies, mortgage lenders, councils, phone companies and credit card lenders.
Today’s findings come two years after Ofgem introduced a range of reforms designed to make bills clearer and easier to understand, including a requirement to provide details of the supplier’s cheapest tariff. However, many consumers are still yet to notice the changes, with almost half (48%) saying they’ve seen no difference to bills and over half (51%) unable to recall information about cheaper deals. Of those who are aware that the cheapest tariff is displayed on bills, fewer than half (47%) switched – suggesting more can be done to prompt consumers away from expensive energy plans.
High levels of misunderstanding also mean that customers are at risk of missing important information relating to how much they pay – including whether the bill is based on an estimated meter reading, if the account is in credit or whether a cheaper tariff is available. Some of the biggest bill shocks can occur when customers receive a bill based on a meter reading, following a series of estimated bills, only to discover they have built up a significant debt.
In addition, over a quarter of customers (27%) admit they don’t bother to check any details on their energy bill beyond the amount they have to pay – making it even harder for them to take control of their energy.
Young consumers have the lowest level of bill comprehension, with almost seven in ten (68%) of those aged 18-35 admitting they don’t fully understand their energy bill, compared to 62% of those aged 35-54 and just over half (53%) of those ages 55 and over.
With last month’s Competition and Markets Authority proposals including a call to provide consumers with much clearer information to help them engage with the market, today’s findings show that further bill reform can’t come a minute too soon. Uswitch.com is calling for Ofgem, together with energy suppliers, to push forward with plans to simplify overcomplicated energy bills. SSE, for example, has published designs for a redesigned bill following a year-long research project with customers, design experts and consumer groups.
Technology is also playing a role in helping consumers understand their energy use and spend. Uswitch.com’s recently launched Energy Switching App for Android allows users to compare, switch and save on energy directly via smartphone or tablet, with the functionality to scan a bill using the in-built QR code reader. The new Android app follows the success of its iOS app, which has saved customers almost £700,000 since launching last May.
Ann Robinson, Director of Consumer Policy at Uswitch.com, says: “The confusion around bills is a problem that must be tackled if consumers are to get in control of their energy use and spend. If they can’t make sense of their bill, customers could be missing out on better deals or risk bill shock by accumulating significant debt.
“Given that Ofgem’s reforms – which were designed to give clearer information to customers – came in two years ago, it’s worrying that so many remain baffled and bewildered by their bills. We’re urging Ofgem and suppliers to press ahead with plans to make bills easier to understand, making it simpler for consumers to use less, waste less and pay less for energy.
“In the meantime, technology is already helping people get to grips with overcomplicated bills. QR codes, which now appear on every bill, allow services like Uswitch’s new app to automatically read all the information needed to switch to a cheaper tariff in just a few taps.”
Jason Wakeford
Phone: 0203 872 5612
Email: jason.wakeford@uswitch.com
Twitter: @UswitchPR
Research was conducted online by Opinium between 15th and 19th February 2016, among 2,000 UK adults. 244 respondents said they are either not involved in paying for their household’s energy usage, or that their household doesn’t pay for energy (e.g. costs covered by a landlord). Therefore statistics relating to energy bills are based on a sample of 1,756 consumers who are responsible for paying the energy bill.
When asked to describe their understanding of household bills, 40% of energy bill payers said ‘I fully understand the information on my bill and am confident in my knowledge’. This compares to 61% of bank/building society bill payers, 61% of credit/store card bill payers, 58% for home telephone bill payers, 58% of mobile phone bill payers, 55% of council tax bill payers, 54% for broadband bill payers, 52% of DTV bill payers, 53% of mortgage bill payers and 47% for water bill payers
When asked ‘Since April 2014, would you say that your bills for each of the following have become easier or harder to understand?’, 48% of respondents said they have noticed ‘no difference’. When asked if they were aware of supplier requirements to provide details of their cheapest tariff, 19% said ‘I was aware of this but my supplier has not told me about a cheaper deal’, 17% said ‘I was unaware of this and my supplier has not told me about a cheaper deal’ and 15% said ‘I was unaware of this and don’t know if my supplier has told me about a cheaper deal’ – adding up to a total of 51% who do not recall being told about a cheaper deal. When asked ‘Have you used this information to shop around for a more competitive tariff?’, 24% of those who said they were aware of supplier requirements to provide details of their cheapest tariff said ‘Yes - and I have switched to a new provider’ and 23% said ‘Yes - and I have switched to a new tariff with the same provider’ – adding up to a total of 47% who have switched.
When asked ‘Thinking about when you receive a bill from an energy provider, what do you tend to do with it?’, 27% of respondents said ‘I check how much I have to pay but little else’
When asked to describe their understanding of their energy bill, 32% of bill payers aged 18-34 said ‘I fully understand the information on my bill and am confident in my knowledge’, compared with 38% of those aged 35-54 and 47% of those aged 55+
https://www.ofgem.gov.uk/publications-and-updates/effective-billing-and-information
Uswitch’s iOS app has saved consumers an average of £363.91. A video explaining how the app works can be viewed here.
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Uswitch is the UK’s top comparison website for home services switching. Launched in September 2000, we help consumers save money on their gas, electricity, broadband, mobile, TV, and financial services products and get more of what matters to them. Last year we saved consumers over £373 million on their energy bills alone.
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