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Last Updated: Monday, 11 February 2008, 12:19 GMT
Energy firms' bills criticised
By Bob Howard
BBC Radio 4's Money Box

Electric plug and socket
When it comes to energy bills, are you plugged-in?
A consumer watchdog says it is "immensely complicated" for consumers to understand changing energy bills.

It is difficult for customers to check charges, says Energywatch, when firms put up prices mid-way through a billing cycle.

Five of the UK's biggest power companies have announced price rises to customers since the start of the year.

Energy retailers say there is no agreed adjusting method, but industry guidelines ensure fair billing.

Quarterly confusion

Maths graduate, Rodney, from south London, was confused about how he was being charged by his electricity supplier, Npower.

It was the first to announce a rise in the cost of gas and electricity at the start of this year.

That meant from 5 January, Rodney has to pay 12.7 per cent more for the electricity he uses.

If you have doubts, challenge them, ask them what the method is that they use.
Robert Hammond, Energywatch

But when he got his latest quarterly bill, he found it difficult to understand how his energy company had decided how much should be billed at the cheaper rate, and how much at the more expensive one.

"I noticed that the number of units being used at the lower price was, in proportion, a lot lower than the number of units at the higher price.

"There was no explanation as to how they had done this."

The breakdown

BBC Radio 4's Money Box researched how the big energy suppliers break down customers' bills when there has been a change in the cost of gas and electricity units, part way through a billing cycle.

It discovered that Npower, E.On and Scottish Power take into account that customers probably use more energy in the colder months of January and February, than in November and December, and factor this in.

By contrast, Scottish and Southern and British Gas calculate by simply dividing customers' energy use by the number of days in the quarter.

This means how customers are billed and the company they deal with, can make a small financial difference when the tariff changes.

Consumer advice

Companies will not load a bill to make sure someone is paying more than they should have done
Duncan Sedgwick, the Energy Retailers Association

Robert Hammond, from the consumer watchdog, Energywatch, says consumers should check their bills carefully.

"There are absolutely no regulations about this whatsoever, it is immensely complicated for the consumer.

"If you have doubts, challenge them, ask them what the method is that they use."

The energy suppliers deny any suggestion that they use price changes to weight quarterly bills in their favour.

Duncan Sedgwick, chief executive of the Energy Retailers Association, agrees there is no one accepted method for doing these calculations.

But he says there are already safeguards for the consumer in place:

"Companies will not load a bill to make sure someone is paying more than they should have done.

"They have to work to a code of practice for accurate bills."

BBC Radio 4's Money Box was broadcast on Saturday, 9 February 2008 at 1204 GMT.

Money Box



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