Utility Week

UTILITY WEEK | APRIL 2021 | 21 Customers Talking Points… What can we learn about future tariffs from innovation today? T oday, most people buy their gas and electricity in a fairly straightforward way but there are some key ways this might change in the future. The potential for more technology-focused or outcomes-based offers are well discussed when policymakers get together to think about future protections. Though there's still a lot to learn about what this means for people, some providers have already begun to create new offers and people are using them. We asked 100 people to tell us what they wanted from future energy retail offers. These qualitative focus groups identified five major themes including ease of use, familiarity, reliability, low responsibility and low effort. Granted, this is what people think they will want based on their current experiences of the market, but it also gives an indication of how much time they are willing to spend making decisions about their energy use. Yet the different factors people have to juggle when choosing innovative tariffs can be confusing and time-consuming. There's a lot of appetite to explore how digital tools can be used to recom- mend the most suitable options, using people's current energy use and patterns. But different assumptions will lead to different options. Therefore it's important we get the design of the tools right so they show the most appropriate ones for people, and that those assumptions are made clear. It's also key that the smallest businesses have guaranteed access to their smart meter data to make it easier for them to try new offers. In our analysis, half of the tariffs directed at EV drivers (or soon to be drivers) had free "EV miles" included as a bundled service. These tariffs apply credit to people's accounts which, in theory, equate to the number of miles specified. But the credit given is based on a number of different assumptions, whether that be miles accumulated at an off-peak rate, the car model used or efficiency assumptions about the car. What that means for people is that some suppliers appear to offer better value EV miles than others. The value of EV miles in these offers ranged from £30 to £200 and while the value isn't insignificant, this risk could be greater in markets like heat. It's clear that one of the risks for buying an outcome, when the costs aren't personalised, are the assumptions made in determining costs and transparency for the buyer. Using one tariff, we explored the comparative effects on people's energy bills, with a varying ability to change their electricity use. The overall effects are positive for people who are able to use all or some of their electricity at off- peak times. The energy market has to change if we're going to reach the government's target of net zero emissions by 2050. These trials are a great start – they help companies to work through the challenges and consider how to give people a great experience. Of course, right now these tariffs won't feel like an option for everybody but in the future, the energy market should be fair, and everybody should have access to a range of options that might suit them. Dhara Vyas, head of future energy services, Citizens Advice Comment: Technology will allow suppliers to offer tailor-made tariffs, but they must be simple to understand and transparent. The news in numbers: 3.18m Number of English households classed as in fuel poverty in latest BEIS figures (for 2019). This is equivalent to 13.4 per cent of the total. £10.4m Amount returned to billpayers by 18 energy suppliers which failed to correctly protect customers' tariff prices when they switched 2m Customer milestone reached by Octopus Energy in March. FOCUS Smart meter complaints on the rise There was a "significant increase" in the proportion of complaints about smart meters in the final quarter of 2020, Ofgem's latest consumer perception survey has found. More than 3,200 customers were surveyed in November and December last year for the latest iteration of the survey, which has been running since late 2018. It revealed that the proportion of complaints that were about smart meter problems significantly increased – up to 29 per cent from 15 per cent in the previ- ous quarter. A problem with my bill A problem with my smart meter Pricing/cost of energy Attitude or behaviour of staff A problem with my direct debit A problem with a refund Price comparison website saving not received Switching supplier Managing my payments Missed appointment Received sales call I didn`t want A discount not applied A problem with my meter Received marketing material I didn't want Privacy issue Reasons for complaint (top 15) Source: Household Consumer Perceptions of the energy market 31% 29% 25% 17% 16% 14% 13% 12% 10% 10% 10% 8% 8% 7% 7%

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