Energy bills continue to top the list of baffling bills
Despite the introduction in the Spring, of new rules from energy regulator Ofgem requiring energy companies to simplify bills, research shows that millions of customers are still struggling to understand their electricity and gas bills.
Ofgem’s ‘clearer information’ rules came into force on 31 March 2014. They are a key element in the energy regulator’s Standards of Conduct for suppliers which are designed to create a simpler, clearer and fairer energy market. The ‘clearer information’ rule states that any information given to customers must be clear, easy to understand and presented in jargon-free language.
However, Gocompare.com’s annual ‘Baffling Bills survey found that energy bills remain top of the list of documents people find hardest to understand with this year’s results showing only a slight improvement in the clarity of energy bills from last year (electricity: 36%, gas 33%) and when the survey was first conducted in May 2012 (electricity:36%, gas 33%).
Rank - Document customers find hardest to understand - %
1 Electricity bill 31
2 Gas bill 28
3 Water bill 14
4 Home insurance renewal documents 11
5 Council tax bill 10
6 Car insurance renewal documents 7
7 Landline/telephone bill 6
8 Mobile phone bill 5
9 Credit card statement 3
10 Bank statement 3
Overly complicated calculations and terminology were cited as the main reasons why people struggled to understand their bills.
Worryingly, a third of those surveyed admitted that they tended not to read bills they find confusing – potentially missing out on important information about their bills from over or under payments; errors or omissions; notice of changes to tariffs or other charges to the availability of a cheaper deal.
Just under a fifth (19%) of those surveyed said they don’t understand most of their bills, while 58% surveyed believe that companies deliberately keep bills unclear.
The use of technical calculations and terminology and, abbreviations contribute to baffling bills. The main reasons given for not understanding bills were:
Overly complicated calculations (63%)
Not understanding the terminology used (38%)
Too much information (28%)
Language used is confusing or not plain English (26%)
They include too many abbreviations (17%)
When asked about the meaning of terms and abbreviations commonly found on bills and other documents perhaps unsurprisingly terms most people couldn’t explain were volume correction factor (59%), calorific value (39%), AER (33%), Indemnity (31%), chargeback (30%), kilowatt hours (27%), compound interest (26%), inclusive allowance (18%) and Economy 7 (17%).
Jeremy Cryer, energy spokesperson at Gocompare.com, commented: “Since the end of March 2014, energy firms have been required to provide customers with clearer bills and annual statements. The changes are designed to make energy bills simpler to understand and to make it easier for customers to see how their current deal compares with other available tariffs.
“In addition to showing customers what they have paid and what they owe, the new format bills give customers personalised information on the cheapest tariff their supplier offers. Annual statements will contain useful information on tariffs including discounts, end dates, termination fees and give details on switching suppliers and a summary of the customer’s yearly energy usage.
“The new style bills have now been in force for over six months but, our survey suggests, many customers are still struggling to get to grips with the information they are being sent. However, we urge customers to take a fresh look at their energy bills to make sure they are not missing out on valuable savings.”