ENERGY - STRINGS ATTACHED

October is being blown in on a watery wave of squally rain and gusty winds. Temperatures are dropping like flies and I’ve already lit a cheeky fire in the stove to test everything’s working after the sweep’s recent visit.

Not more rain!!

October is not the only thing heading our way. The annual autumn price cap increase is also rearing its ugly head bringing higher energy prices to our doors. Ofgem claims the price cap is a way of protecting us all from unscrupulous price increases but secretly I’ve always thought that the price cap is a way of making consumers cover the cost of energy supplier ‘hedging’ by making us all stump up the extra for their inability to buy cheap energy in advance when wholesale gas/electricity prices are low.

In the same way as I’ve been busy stocking up my Doomsday cupboard with bottles of vino, cheese nibbles and marzipan or packing the freezer with venison and Viennetta ice-cream whilst pre-Crimbo prices are cheaper, energy suppliers should be doing the same. Provided you have the cash, there’s really no excuse for not buying gas or electricity during the summer months when it costs less ready for onward delivery in the winter months.

But that’s an aside, the real reason for this post is not to highlight the inadequacy of these two-bit players in the game of energy but to look at deals on offer by energy suppliers to ‘help’ protect us against price cap increases.

Now my mail box has been buzzing with offers of fixed price energy tariffs from Ovo, my energy supplier but the one thing that makes these offers unattractive is that they come with strings attached rather like an old-fashioned marionette puppet.

Who is being protected - you or them?

Of course, I’d love to fix my energy prices now to prevent having to pay even more in January but to get this benefit, I don’t want to:

a) Get a smart meter
b) Pay by direct debit

These are the 2 strings attached to many fixed price energy tariff deals on offer.

My question to Ofgem or any energy suppliers out there reading this post is simply this – why should there be strings attached for consumers to obtain better protection against price increases?

My own answer is that these deals are being used as the ‘carrot’ to enable energy suppliers to meet smart meter installation targets set by the Government thus avoiding hefty fines if they don’t.

Want to lower your energy prices?

Yesterday I listened to Martin Lewis’s podcast explaining why smart meters don’t work and after reading the last tabloid horror story about how one customer was billed thousands of pounds in error due to faulty smart meter readings then struggled to get a refund, my reaction is sorry but no thanks. You can keep your smart meters, ta very much. I’ll continue to provide my own readings via the online portal.

Always listen to Martin

The second string is not so much a ‘carrot’ for consumers but advantageous for energy suppliers who can pump up your DD extortionately without so much as a by-your-leave. Again, lots of tabloid horror stories about people on the breadline being forced to pay as much as £300 or more per month because their supplier had increased their direct debit.  Then they were unable to obtain refunds for huge credits.

In case you are not aware, direct debits give financial power to the institution who sets them up. They don’t even need your permission to change payment amounts as you when you sign up to a direct debit then you’re giving them the go ahead to make whatever changes they want. Companies are obliged to tell you that there is a change to your DD payment but only cancelling a DD will prevent it from being increased.

Standing orders vs direct debits

Believe me, I’ve been on the phone in tears with past energy suppliers trying to haggle down my monthly direct debit and all pleas fall on deaf ears. They are not interested in how you juggle your household budget.

Standing Order payments on the other hand give financial power to the person who sets them up. In the same way as a direct debit, you can instruct a regular monthly payment from your bank to your energy supplier but it’s YOU who is in control of the payment amount. You pay what you can afford each month NOT what they’d like you to.

Naturally, energy suppliers don’t like this. They want your money up-front. They don’t want customers to pay on receipt of bills or by standing order so the trade-off for retaining control over your financial affairs is that you have to pay more for your standing charges or gas/electricity consumption costs.

The lure of paying less for your energy by having a direct debit may work for some people but not for me. I’d rather keep control of my household budget to live within my means than have money whipped out of my bank account thus pushing me into an overdraft situation each month.

In its recent consultations over the future of energy standing and consumption charges, Ofgem said pretty much nothing in respect of customers who pay up front by monthly standing order. Their attempts to level the charging playing field have focused largely on pre-payment customers but no-one is championing the cause for standing order customers except me. I’ve emailed Ofgem feedback on their consultations until I’m blue in the face but again, it falls on deaf ears. Monthly standing order customers are basically subsidising everyone else’s bills by paying over the odds.

Ofgem - did you hear that?

So next time you receive an email regarding fixing your energy tariff, check the small print for strings attached. Ask yourself this – is it better to pay more but be the master of your own energy destiny or pay less and be an energy puppet?

Don't be an energy puppet!