To understand more fully the impact that this may be having on consumers we have undertaken research across a wide range energy price comparison websites and energy supplier websites. For the purpose of this research we have labelled, and defined, the alternative methodologies as follows;
(meaning true like-for-like comparison)
This is the approach where a direct comparison is made between the cost of the customer's existing tariff and the cost of the new tariff. So, for example, if a customer is on a Tariff A that costs them £1,000 a year and they switch to tariff B which costs £900 a year, then the saving is £100 (because £1,000 - £900 = £100). The savings quoted are real. These savings are exactly what the customers see on their energy bills and what is taken out of their bank accounts.
The inflated methodology is one where the comparison is made using not just the customer's current tariff but on a split basis between the current tariff up to the tariff end date, and (after that tariff ends) on the existing supplier's Standard tariff (which means most expensive tariff). This "inflated" methodology is based on an approach proposed by Ofgem. Ofgem's calculations for this approach are shown in Appendix B.
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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