Energy News

Energy-efficient customers penalised

Tuesday, 22 December 2009

By Hazel Cottrell - hazel@consumerchoices.co.uk

Energy companies should reward those who reduce their energy usage, rather than penalising them with standing charges and tiered rates, says expert.

Brits who try to be energy-efficient and use less gas and electricity are being charged more for their energy, than those who use more.

Half of the eight best-buy energy tariffs available apply standing charges – daily fees that are applied before any gas or electricity is used – according to Confused.com.

Gareth Kloet, head of energy at Confused.com, said: “In terms of standing charges, customers are charged the same for sitting in a house with just candlelight for heat and light, as customers who have the radiators on full blast, the fires roaring and all their lights on.”

The remaining four best-buy energy tariffs use tiered rates to charge customers. This means the first units of gas and electricity used each quarter are the most expensive, so the less energy you use, the more it will cost you per unit.

Kloet said: “This is not a responsible way to do business. Energy companies should consider reversing this tariff structure with the penalty being on the higher-end consumption and reduced rates for more efficient usage.”

However, Chris Eagle, commercial manager at Energychoices.co.uk, pointed out: “The customers who use the most gas and electricity are the most profitable for energy companies, so there is no incentive for the companies to penalise them and risk losing their business.

“Unless regulator Ofgem steps in and legislates against tiered rates and standing charges, I don’t expect to see changes anytime soon.”

Eagle advised: “If you are cutting your energy usage, you may benefit from a tariff that doesn’t apply a standing charge or use tiered rates. Doing an accurate energy comparison, based on your exact usage, will help you find the best deal.”