Energy 'competition assessment' fast-tracked
Make It Cheaper CEO and founder Jonathan Elliott explains why we shouldn't rely on the CMA investigation to cut our energy bills
Fast-forward to December 2015 and the Competition & Markets Authority is due to deliver the findings from its 18-month investigation into 'tacit coordination' of the energy market. Whether or not the recommendations - that are likely to take well into the following year to implement - will improve your financial situation remains to be seen. However, I can guarantee you can find out if you are being taken for a mug by your energy company in more like 18 minutes.
If you've never switched before, or been with the same supplier for more than a year, the chances are there's a better deal out there for you. You're not going to get it by waiting until 2016 for the CMA outcomes, neither will you get it by banking on a government-enforced price freeze and you are certainly not going to get on it by relying on the loyalty you think you have built up with your existing supplier.
No, the only way you are going to get on a deal that takes full advantage of the competition that already exists among energy suppliers is by being proactive, grabbing a bill and spending a few minutes going online or speaking to an independent expert with access to all the available tariffs.
You may feel I'm bound by that assertion because I happen to run a switching service and, yes, the two things are very much related. The problems that exist in the market today are no better than the problems which existed in 2007 and that prompted me to set up a system that helps people get a fair deal on their utilities. Both then and now, being fair means being transparent and so we tell any of our customers how much we make out of their bargain.
The reality is that homes switching supplier, even with a price freeze in place until the CMA has run its course, will pay 20% less for their energy than non-switchers. That's £991 a year instead of £1,236 for the average home. And funnily enough, anyone in the UK selecting the best deal today would not be switching to any tariffs being offered by the Big 6.
For business premises the difference is even greater at 27%. A hairdresser, for example, using 16,000 kWh of electricity and 50,000 kWh of gas a year would spend £3,700 if they switch instead of £5,100 by doing nothing. How many short-back-and-sides would it take put an extra £1,400 a year on its bottom line? A lot more than 18 minutes' worth of time that's for sure.
Businesses looking to switch, by the way, could do worse than use our new tool: the Smallprint Pointer that highlights where contract end dates and renewal deadlines are displayed by the main business energy suppliers. Each supplier has chosen a different location on the bill to display its key information, with no two versions the same and notice periods still closing up to 90 days before contracts end, resulting in (some but not all) contracts 'rolling' on to higher tariffs.
The fact that we need this tool at all speaks volumes about the well-meaning, but poorly executed, regulation we're stuck with that allows suppliers to make their own 'interpretation' of the rules, leading to widespread confusion among consumers and, consequently, engagement in the market to suffer.
And that brings me back to my point: the market is broken because too many consumers are unwilling or unconvinced of the benefit of seeking out a more competitive deal. Until the CMA is able to properly address this in 2016 (and I sincerely hope it does) the only way to beat the Big 6 is to look after No.1.
Jonathan Elliott is founder & CEO of Make It Cheaper and a vocal campaigner for fair treatment of customers by the utility companies.