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Complicated energy bills even baffle accountants

Complicated energy bills even baffle accountants

Category: Gas and electricity

Updated: 30/09/2011
First Published: 22/09/2011

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The tariffs on energy bills are so complicated that even an accountant could not calculate how much they should pay, new research has revealed.

With all six major energy providers having recently revealed rises in the price of their gas and electricity ahead of the winter, millions of households should be working out exactly what they pay and whether it is worth switching to a new supplier.

However, when Which? asked 36 people, including a solicitor, an engineer and an accountant, to work out their domestic energy bill using nothing but information from the supplier's website, just one - a company director - could do it.

The suggestion is that such complexity conceals bad deals from customers, with comparisons being made particularly difficult by the tricks and caveats that energy tariffs typically include.

Amongst the most common tariff tricks are two-tiered tariffs which penalise lower users by charging a much higher rate for the first block of units, and 'discounts' that do not materialise because the customer leaves the provider before a set period.

With many people facing energy price rises of 10-20% this winter, Which? said it is vital that people are able to work out their bills and check they are paying the right price.

As a result, it has called on Ofgem to introduce one simple standard format for all tariffs, which would have a daily charge covering fixed costs and a unit rate covering the actual energy used.

"There are straightforward ways that consumers can cut their bills - for example by switching to online deals or paying by direct debit," said Richard Lloyd, Which? executive director. "But that won't help people to pick the best tariff for them."

The call comes as separate research suggests the Government is set for a £197 million tax windfall from the latest round of energy price rises.

Energyhelpline.com said the annual VAT taken from domestic energy will rise to £1.5 billion because of the recent bill increases and has asked the Government to consider cutting the VAT rate on power from 5% to 4% in order to help out hard-pressed households.

"This will give an immediate £13 a year saving on a typical bill and, for once, the Government would actually be reducing people's bills instead of just talking about it," said Mark Todd, director of Energyhelpline.com.

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