03/11/2017
More freedom for energy suppliers to tailor cost predictions (UK)
Consumers can expect suppliers to give them annual cost projections for gas and electricity that are transparent, accurate and fully reflect the relevant tariffs, under Ofgem proposals to replace the current prescriptive projection methodology with a more flexible system that better enables suppliers and comparison sites to tailor projections to reflect current and future tariffs.
The methodology that suppliers and some comparison sites must currently follow sets out in detail how they should factor in standing charges, unit rates, discounts and charges for bundled products.
‘Estimated annual costs for domestic consumers’ seeks view on Ofgem’s proposals for a new methodology that reflects the growing range of tariffs on the market so consumers are better able to budget and compare/switch tariffs with confidence.
It will
- be personalised to the consumer, based on information that is reasonably available to the supplier or comparison site or reasonable assumptions where data is not available
- be based on actual historic consumption where data is available
- include non-contingent discounts * and non-optional bundled charges but exclude contingent discounts ** and optional bundled charges
- be applied consistently when used to provide comparison with different tariffs
- be transparent and accompanied by a description that makes it clear to the consumer what it is, what it can be used for and which assumptions have been used in its calculation
Wider changes, such as when and in what type of format annual projections should be provided to consumers, will be considered in a wider review of the rule relating to customer communications.
* ‘Non-Contingent’, eg online or dual fuel discounts automatically applied.
** ‘Contingent’, eg prompt payment by customer.
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