How energy price comparison websites exaggerate savings - Part 2

2. Introduction

Much has been written in the press recently about energy price comparison websites hiding the best energy deals from consumers. While this has generated extensive headlines, there has been little analysis of the level of consumer detriment this may have caused. Indeed where analysis has taken place it has found the level of detriment to be fairly minimal.

This report focuses on an altogether different and much larger issue. While transparency and commissions have been centre stage, a much bigger and less transparent issue has been lurking in the background. The issue, the way energy price comparison websites calculate savings to consumers, has to date been obfuscated by complexity and shrouded by vested interests.

But now consumers have started to notice that all is not quite right with the savings they are being quoted on price comparison websites. Some call the behaviour "dishonest", others believe it to be "fraudulent".

The new approach to "inflated" savings was introduced by Ofgem from 30 March 2014. Until now it has applied only to energy suppliers in certain circumstances. However, the vast majority of price comparison websites were only to keen to jump at the opportunity this presented to change their calculation approach. After all, it suited their commercial interests to do so. Most worryingly, Ofgem is now going to force the last few remaining accredited sites that have stuck with the honest "true" like-for-like approach to move to the inflated methodology. Ofgem is planning to kill off the true, honest, like-for-like comparison of energy tariffs that has worked so well for consumers for the last 10 years.

In this report we first set out the background to the issue.

We then undertake research on 15 price comparison websites to identify which sites follow which methodology. We use 2 different scenarios to quantify the impact that the methodologies have on savings quoted to consumers.

We undertake research on 23 energy supplier websites to identify which energy suppliers follow which methodology.

We put together a range of estimates as to how many consumers are being affected by the "inflated" savings approach and by how much, in aggregate, they may be affected.

Finally, we call for a range of actions from consumers, regulators and politicians to put an end to mis-leading savings quotes in the energy industry.

Campaign to stop dodgy and mis-leading comparisons

Support our campaign to stop this dodgy and mis-leading practise.

If you feel you've been given an "inflated" saving by a price comparison website or energy supplier we'd like to know about it.

Please drop us a note.

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