EV tariff bundles present confusing picture for consumers

Electric vehicle (EV) tariff bundles being offered by energy retailers are complicated and difficult to compare, a new Citizens Advice report has concluded.

The paper published by the consumer charity this week explored how the market is changing and what this means for consumers. It highlighted concerns about consumers facing difficulty comparing innovative new offerings which could result in them choosing tariffs unsuitable for their needs.

It also pointed to potential issues faced with consumers as they buy and install new smart appliances in their home, emphasising the need to help them make informed choices.

The research took a three-stage approach which analysed both electric vehicle (EV) and smart-enabled tariffs, consumer cases and interviews with industry stakeholders.

Complicated consumer journey

It recognised the many potential benefits of new tariffs but found that comparing them can be a “complicated and daunting task”.

In order to choose the right tariff, people also need to have a realistic understanding of whether they are able to shift their energy usage to when it is cheapest and to what extent.

The report found that many of the larger price comparison sites do not allow consumers to compare EV tariffs and while some of the smaller ones do, it is not always clear where their data comes from or what assumptions are made in the comparison.

“Many price comparison websites do not provide a full market view, and don’t show all of the tariff options available to consumers,” it added.

It concluded that a clear complaints handling process, alongside access to “good quality and independent advice and redress”, could help give people the confidence to engage in these new markets.

Analysing EV offerings

Over recent years, there has been an increase in the number of domestic EV tariffs publicly available across the market, with a total of 12 as of 14 December 2020, up from 2 in August 2017.

Of the EV tariffs, 7 included some form of bundling in their offer including charger installation, “free miles” and reduced costs at certain public charging points.

While bundled tariffs can be useful, it can also make it more complicated for consumers to compare tariffs. This is particularly the case where the methodologies for calculating bundle value varies from supplier to supplier.

Free miles were used by the report to highlight the complexities consumers face when choosing an EV tariff.

For example, each supplier used a different methodology to calculate the amount and value of their free miles. This depended on:

• The car model that was used to calculate the number of miles per kWh
• The efficiency assumptions that were made about that car
• The value per kWh

There were also differences in the amount of information provided by suppliers and how easily accessible the information was on their websites. One retailer did not provide any details of the type of car it had used in its calculation.

In some cases it is unclear what assumptions suppliers are making about how a consumer will charge or use their EV when they make these calculations. This, the report said, could increase the chances of people making the wrong decision.

Commenting on the report, Dhara Vyas, head of future energy services at Citizens Advice, said the assumptions for calculating the free EV miles to customer accounts meant 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,” she added.

Load-shifting

Load-shifting is another area explored, with 7 of the EV tariffs analysed offering on and off-peak rates. However, the report found, not everyone is able to shift their usage to off-peak and the charity said it is important that consumers are given clear information about a tariff and the option to easily exit if their circumstances change.

Vyas added: “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.

“But these tariffs aren’t always beneficial for everyone. As tariffs become more tailored to the technology you have or your lifestyle, having the right to leave your contract when your circumstances change, or you make the wrong decision, will be important.”