If you add together the number of different UK tariffs for gas, electric, and mobile phones, you get a number greater than the atoms in the known universe. It took a while for me just to decode one of them, based on a letter from EDF describing changes to my “dual fuel deal”. Their explanatory leaflet is called “Everything you need to know about the changes to our discount structure”. What it gains from clear English it loses with incomplete detail.
Looks to me that the changes benefit EDF’s larger consumers at the expense of their smaller consumers.
The explanatory leaflet provides a couple of optimistic examples, and describes the changes in general terms based on “a typical customer”. But what does it really mean for their consumers? Well, let’s use the figures that EDF define as “a typical customer”. (There is some maths involved, but don’t panic, I won’t be setting a test this semester.)
At first glance, it looks like EDF hoiked their prices by an eye-watering 32%. Before VAT, the gas charge increases from 14.18p per kWh to 18.67p. Electricity increases from 5.3p per kWh to 7.0p.
Then you notice they have one rate for the first lot of gas/electric you use each quarter, and a different rate (about half) for anything after that. So they’ve raised the former by nearly a third, but left the latter unchanged. And to add to the confusion, they have also changed two other discounts:
- Instead of a flat monthly discount for direct debit payments, they give a 6% discount on your quarterly bill
- They have slashed the “duel fuel” discount by two thirds
The figures that EDF define as a typical customer are “3,300kWh of electricity and 20,500kWh of gas a year”. And the tariff rates before VAT are:
- First 225kWhs per quarter = 18.67p (was 14.18p in 2009)
- All other kWhs = 10.50p (unchanged)
- First 670kWhs per quarter = 7.000p (was 5.300p in 2009)
- All other kWhs = 3.056p (unchanged)
- Discount 6% of the total bill (was a flat saving of £24 per year in 2009)
- Discount £8 a year (was £24 per year in 2009)
Here’s how it works out for a standard user. I’ve made the reasonable assumption that in every quarter the average consumer uses at least 225kWhs electricity (3,300/4) and at least 670kWhs gas (20.500/4), even in summer; and that total usage remains the same year-to-year, for the purpose of comparison.
The effect on the average consumer of the changes to EDF’s discount structure is an increase of 5.58% (well above UK inflation).
But someone using half the average sees their bill increase by a whopping 16.18%:
Whereas someone using half as much again as the average sees their bill increase by only 1.84%:
In fact, if you used twice the average, your annual bill would be slightly lower in 2010 than it was in 2009!
Obviously, if customers reduce their use of gas and electricity year-to-year, they will reduce the actual amount they have to pay during 2010. But the rewards for doing that are not equal across their customer base. And with such a cold winter, I think most people will be using more fuel this year anyway.
- EDF’s changes appear to penalise their smaller (or more prudent) customers more than their larger (or more profligate) customers, whether customers try to reduce consumption or not
- Most customers are unlikely to work this out from the information provided by EDF.
- If it’s as complex and confusing as this for changes to just one tariff for just one supplier, how effective is market competition really?