Simple pricing would increase switching, Which? tells CMA

A simple pricing model would more than double the number of consumers spotting the cheapest energy deal and increase their willingness to switch, according to fresh research to be submitted to the Competition and Markets Authority.

The report from Which? and EDF Energy revealed that around nine in 10 could spot the best deal with simple pricing in both a price comparison (91 per cent) and a newspaper ‘flat table’ scenario (87 per cent), compared with 43 per cent under the current pricing format on a price comparison site and 35 per cent in a flat table layout.

Which? also found that a simple pricing model, in which consumers don’t need to know their energy consumption, almost halved the time it took for consumers to choose a tariff from 55 to 36 seconds.

The findings will now be submitted to the CMA inquiry into the energy market and Which? is now calling for the CMA to recommend suppliers introduce simple pricing.

In a simple pricing model energy tariffs are displayed akin to petrol prices on forecourts, allowing consumers to compare the cost of energy tariffs at a glance and meaning they can make switching decisions faster.

Of the 2,500 people surveyed, 47 per cent said they would switch their energy tariff when looking at the simple pricing table compared with 38 per cent who were given the table with the prices laid out in their current format.

Six in 10 (61 per cent) said it was easy to make a choice with simple pricing versus four in 10 (38 per cent) who thought it was easy with the current model.

EDF managing director for customers Beatrice Bigois said: “The market for energy is highly competitive, but it will work better if every customer feels able to make a simple and well-informed choice.

“Energy companies will have to work together to make price comparison easier and more accurate but the need to find a better way for customers is clear,” she added.

Which? executive director Richard Lloyd said it is “encouraging that one of the country’s largest energy suppliers is backing simple pricing”.

He continued: “The current energy market investigation is a golden opportunity to put consumers first by introducing simple pricing.”

Research carried out by Which? in March last year showed that only one third (35 per cent) of people were able to pick out the cheapest energy deal when they were presented with them in line with Ofgem’s Retail Market Review (RMR) reforms.

In September, the group called on regulators to implement a guideline price for retail energy suppliers to help drive competition between suppliers in a bid to reduce consumer bills.