Co-operative Energy calls for ‘Six Big Reforms’ for consumers before Ofgem consultation closes

•  Customers under-estimate bills by an average of £334
• 82% who believe they are on cheapest tariff available are paying more than they need to
• Dual energy consumers who think they are on cheapest tariff could save £180 per year
• Those who think they are on cheapest gas or electricity tariff could save £107 per year

Independent energy supplier Co-operative Energy today released data revealing that UK energy bills are so complex that consumers underestimate their bills, often missing out on the best deals as a result. With Ofgem’s consultation into tariff complexity closing on 23^rd April 2013, Co-operative Energy are proposing ‘Six Big Reforms’ and encouraging consumers to take to Twitter and urge Ofgem to ‘keep it super simple’ via the campaign hash tag #Big6KISS.

The survey, which tested the extent to which consumers understand their energy bills, found that, on average, UK consumers thought their bill came to £945 for the last year. Government figures reveal that last year the average energy bill was in fact £334 higher than people realised, at an average of £1,279.

The survey’s findings suggest a concerning level of awareness among customers about what they are paying, and what they could be saving.

37% of respondents said they chose their current tariff as they believed it was the cheapest available. Yet Co-operative Energy’s follow-up study among this group (using an independent price comparison site to test whether a cheaper tariff was available) found that 82% could be saving money.

Consumers on a dual energy tariff were found to be able to save an average of £180 per year. Those on single gas or electricity tariffs could be saving themselves an average of £107. In fact, only a third of the respondents (35%) in the second study managed to provide complete data for comparison from their bills – indicating just how complex energy bills have become.

The research also suggests a degree of apathy and confusion among customers, which could be costing them money:

• 65% of energy consumers didn’t know the name of their tariff or couldn’t remember it.
• Only 16% of energy consumers chose their tariff because it was transparent.
• 40% of energy consumers chose their current tariff more than a year ago.
• One in ten (11%) had moved house and stayed on the property’s existing tariff, rather than shopping around for the best deal.
• Only 21% of people were able to accurately identify themselves as having above or below average usage

Nigel Mason, Co-operative Energy said, “At a time when energy prices are going up and people have less money in their pockets, we need a better way for customers to be sure that they are getting the best deal. I expect those who thought they were on the cheapest tariff would be very surprised to learn that they are not. A saving of £180 is the equivalent of over a fortnight’s weekly shopping. I hope that’s a good enough reason for people to tweet at Ofgem and ask for reforms that will count.”

Commenting on the wider implications of the survey’s findings, Mr. Mason said: “Ofgem’s intentions for tariff reform are positive but don’t go far enough. The proposals published last month mean that there will still be at least 72 tariff options per supplier, and the possibility of over 1,000 tariff permutations still in the market. A number of worrying new loopholes have opened up, such as suppliers being allowed to create an unlimited number of special tariffs just for collective switching schemes. Far from simplifying the market for consumers, these final proposals go as far as to enshrine the current complexity in a new rule-book.”

Co-operative Energy’s recommended ‘SIX BIG REFORMS’

1. Limit of two open tariffs per payment method; one to be a standard (‘evergreen’) variable tariff.
2. The benchmark tariff –against which the price of all other variations should be compared – must be online, dual fuel, and direct debit.
3. Surcharges for variations from the benchmark (offline, single fuel, not direct debit) must be expressed as £/year for the average consumer.
4. No bundled tariffs.
5. The underlying supplier of ‘white label’ tariffs must be prominently labelled.
6. Commissions payable to switching sites and collective switching schemes must be disclosed.

Co-operative Energy (@CoopEnergy) feels strongly that the voice of consumers has not been heard in this debate, so are calling on the energy regulator – Ofgem (@Ofgem) – to go further in its reforms and remove these complexities. Consumers are being urged to support the effort by tweeting Ofgem, the Department for Energy and Climate Change (@DeccGovUk) and the large energy suppliers, asking them to ‘keep it super simple’ via the campaign hash tag #Big6KISS.

For more information please visit http://www.cooperativeenergy.coop/big6kiss.

Co-operative Energy has joined the Energy Bill Revolution alliance, calling for warm homes and lower bills. The alliance recognises that there is an energy bill crisis with many families suffering huge financial hardship. One in four households can’t afford to heat their homes.

This number is predicted to rise to one in three households by 2016. Living in a cold home can be extremely damaging to both physical and mental health. For example, a report by leading public health academic, Professor Sir Michael Marmot at UCL found that one in four adolescents living in cold housing are at risk of multiple mental health problems compared to one in 20 adolescents who have always lived in warm housing.

The Energy Bill Revolution alliance is calling on the Government to use the money it gets from carbon taxes to make our homes super-energy efficient. This is the only permanent way to drive down energy bills and end fuel poverty.

From next year the Government will be collecting over £2 billion in carbon tax every year, rising to £4 billion by 2020 and £7 billion by 2027. Recycled back into energy efficiency programmes, this would be enough to super-insulate more than 600,000 homes a year, bringing nine out of ten homes out of fuel poverty. It could also quadruple carbon emission savings from households compared to the Government’s new energy efficiency policies and create up to 200,000 more jobs – exactly what we need to support the UK’s economic recovery.

Nigel Mason of Co-operative Energy said: “This is a critical issue and Co-operative Energy is happy to join the alliance and offer support. We would encourage other organisations and businesses to take two minutes to sign the online petition, email their MPs and ask supporters and networks to do the same.”

Visit the petition at www.energybillrevolution.org

On Thursday, 9^th May 2013 we are increasing our prices for Pioneer tariff customers by, on average, 8.5% for gas and 9.0% for electricity. For an average dual fuel customer, this price increase equates to an extra £8.39 per month.

Last autumn, when the major suppliers increased their prices by, on average, 8.5% for gas and 8.3% for electricity, we were the only supplier to cut our electricity prices and the only supplier to promise to freeze all our prices throughout the cold winter months when consumers use most energy.

The main reasons for having to increase our prices now are the escalating costs that we are charged to transport energy, which increased by 12 per cent on 1 April, and the five per cent rise in energy costs since our last price change in November 2012.

We pledged to offer consistently competitive pricing and even after this increase we will still be competitively priced against the big suppliers’ standard tariffs.  We are not increasing prices to reward financial investors, but to ensure we continue to run a sustainable business for our members. An announcement about our profit sharing distribution for members will be made on Saturday 11 May at our Annual General Meeting.

Nigel Mason of Co-operative Energy says:

“Ofgem’s intentions for tariff reform are positive but their final proposals – released yesterday – don’t go nearly far enough. They won’t have any lasting impact on fairness and transparency, we believe. Pressure on Ofgem from the big suppliers has resulted in many of the market’s complex practices being allowed to continue. Although the four tariff cap remains, there will still be at least 72 tariff options per supplier, and a number of worrying new loopholes have opened up.

“For example, suppliers will be able to create an unlimited number of special tariffs just for collective switching schemes, plus any tariffs created for ‘white label’ arrangements will be allowed to continue outside the cap. There are also allowances for ‘bundled offerings’.

“Far from simplifying the market for consumers, these final proposals preserve the current complexity. In fact, they go as far as to enshrine the current complexity in a new rule-book.

“Collective switching is of great interest to us if it succeeds in reaching consumers who were previously disengaged. We don’t think collective switching should be about spiriting up special deals for privileged groups of already active consumers. So we find the collective switching loophole an area of great concern. Consumers who are engaged enough to participate in the schemes could benefit to the detriment of suppliers’ core customer s.

“We fully expect this loophole to be heavily exploited by new promoters of collective switching schemes, not all of whom will have sound motives. We think intermediaries will proliferate, which is usually bad news for consumers. Intermediaries tend to put their own interests ahead of the consumer’s, which is why they need regulating, as Ofgem now recognises. This all suggests the market is becoming more complex, not less so.

“We didn’t think the original proposals went far enough so we are disappointed that these final proposals water down an already weak framework.”

Siân Waters switched to Co-operative Energy on the recommendation of local low carbon co-operative Gen Community, which recently installed solar panels on Sian’s property in Tredegar, South Wales.

Siân, who lives with her sister Johanna and their greyhound Brian, is a great believer in ethical business practice and this was a key factor in her decision to switch from her previous energy supplier.

Siân is a professional conservationist and director of the Morroccan -based primate conservation project Barbary Macaque Conservation in the Rif (BMCRif) and as such spends long periods of the year away from home in Africa.

Siân explains: “My experience of starting up and running a conservation project means I’m familiar with the co-operative business model and an ethical approach and when the opportunity came to fit solar panels to my property this was an easy decision for me to make. Gen Community is a community benefit society and was established to develop and invest in low carbon energy projects in the area earlier this year. Solar panels were installed in February and Gen Community was quick to recommend Co-operative Energy so I followed their advice and did so without any hassle!

“Joining was easy and as I’m very interested in climate and conservation issues the renewables side of what Co-operative Energy could provide for me was right up my street.  And whilst I’ve not yet noticed any economic benefits of switching my electricity supply to Co-operative Energy, I’m sure that in the long run this will be of great benefit. I didn’t actually switch for economic reasons but more to have the reassurance that I’m dealing with an ethical suppler which cares about the environment as well as me as a customer. Sometimes it’s not always about the money as other issues are equally important to me.

“I also like the simplicity offered by Co-operative Energy – I’ve never previously understood my energy tariff and now it is all very simple and straightforward,” added Siân.

Gen Community has a unique partnership with Co-operative Energy which allows customers in the Newport region to own a share of their energy supplier and invest directly in their local energy generator.

The partnership between the two co-operatives means that investing members of Gen Community will be able to invest in decentralised low carbon energy generation, with a projected 7% annual rate of return. Members will also be able to own a share of the supplier that delivers power to their homes, completing the chain of end-to-end mutual ownership.

Existing Gen Community customers such as Siân who sign-up to Co-operative Energy also benefit by  receiving £25 off their first bill, plus the energy provider will donate a further £25 to a designated charity specialising in fuel poverty.

To find out more about the conservation work Siân is involved in please visit www.barbarymacaque.org or www.facebook.com//BarbaryMacaqueConservationInTheRif

The highly competitive Sunday Times 25 Best Big Companies to Work For 2013 has ranked Midcounties Co-operative, parent co-operative of Co-operative Energy, as 13 in the table. It’s the third successive year Midcounties has featured in the coveted list and its highest positioning yet.

This is further recognition for The Midcounties Co-operative, which is the largest independent co-operative businesses in the UK and includes successful subsidiary Co-operative Energy, after it was named as Co-operative of the Year at the Co-operative Awards 2012.

Ben Reid OBE, chief executive of Midcounties, said: “I’m incredibly proud of each and every one of our colleagues who have helped make Midcounties the success that it is.

“To make the Top 25 list for a third time and improve our ranking in such a competitive field is a fantastic achievement and one we are immensely proud of. We will use all of our resources to make sure we continue to improve the engagement with our colleagues as I am sure that will ensure our Society goes from strength to strength.”

Since launching in 2011, Co-operative Energy has gained over 100,000 customers and is Britain’s fastest growing energy supplier, thanks to its simple tariff and competitive pricing.

After hearing of consumer group Which?’s plans to help consumers reduce the cost of their energy bills, Carol Lincoln decided to get involved.  She moved to winning suppliers, Co-operative Energy, as part of the Big Switch and has never looked back since.

Despite the mass of letters  she received from her previous energy supplier begging her to stay, Carol found that changing providers was surprisingly easy – in fact, the biggest hassle was sweeping up the old supplier’s letters for recycling. 

Mrs Lincoln and her husband, both retired, live together in their home in Groby, Leicester.  Not only has their switch to Co-operative Energy saved them money on their energy bills, as was the priority, but it’s also brought much greater clarity to their energy bills.

Carol explains: “Being with Co-operative Energy is just so much easier for us – it’s one, simple tariff.  Unlike before, I now know where I am with my energy bills all of the time.  It’s a great relief.”

Having always been a strong believer in the ethical values that the co-operative sector stands for – Carol is both a co-operative member and a regular at her local Co-op store – it was also as a result of Co-operative Energy’s dedication to acquire all their energy from renewable sources that she was encouraged to switch.

“It’s great that we save at least £60 a year on our energy bills as a result of the switch, but I’m even prouder to say that we belong to such an ethical supplier.  Unlike with previous suppliers, who often give you the impression you’re just another sale, Co-operative Energy have an entirely different ethos,” adds Carol.

Reflecting on her time with Co-operative Energy to date, she said: “My experience so far has been excellent.  It’s simple, ethical, and one less worry – I would definitely recommend others to give them a try.”

Ethical energy provider, Co-operative Energy has agreed a partnership with low carbon co-operative, Gen Community,which will allow customers to own a share of their energy supplier and invest directly in their local energy generator.

Gen Community, a community benefit society, has been set-up to develop and invest in low-carbon energy projects in low-income areas across the UK. The first offer, the Newport Solar Share Issue, aims to raise £1 million to install solar PV on 240 homes in fuel poverty. At the start of February 2013, the first successful installations were commissioned.

The partnership between the two co-operatives means that investing members of Gen Community will be able to invest in decentralised low carbon energy generation, with a projected 7% annual rate of return. Members will also be able to own a share of the supplier that delivers power to their homes, completing the chain of end-to-end mutual ownership.

Customers of the Newport Solar Share Issue who sign-up to Co-operative Energy will receive £25 off their first bill, plus the energy provider will donate a further £25 to a designated charity specialising in fuel poverty.

Nigel Mason of Co-operative Energy said: “The partnership with Gen Community has many benefits. It means we’re helping to tackle climate change by encouraging solar power. In addition we’re supporting the local economy and easing the burden of those in fuel poverty.”

Andy Heald of Gen Community said: “Co-operative Energy has a simple tariff plan, is competitively priced and is mutually owned. It’s a great feeling to think that  generation of electricity, supply and export can all be mutually owned if the benefit members of Gen Community choose to switch to Co-operative Energy.”

Co-operative Energy successfully sourced one hundred per cent of its electricity from renewable generators in its first year.

As a leader in improving the practices of the energy industry, Co-operative Energy welcomes Ofgem’s proposals to simplify tariffs. They are good news for consumers. But we think more needs to be done.

When we launched we pledged always to offer our customers a fair price. Most importantly, we promised not to offer new customers a better tariff than existing customers. And, beyond this, we reward our customers with a share of our profits twice a year.

Ofgem needs to investigate the practice of suppliers who reward switchers with their cheapest tariff at the expense of loyal customers, some of whom can pay up to £300 more than the time-limited deals offered to new customers.

Ofgem needs to tackle this predatory and unfair pricing head on to make the market more open to new suppliers and to benefit the hard pressed consumer.