When 99 year old Mary* got in touch with a question about her unit rates, little did I know my intervention would lead to her getting £646 from her energy company and raise big questions about economy 7 tariffs, writes Iona Bain
Last month, I received an email that piqued my interest. It was from Pete, who was writing on behalf of his 99 year old mother, Mary. He had seen me on BBC Morning Live and wondered if I could help him get to the bottom of a big old energy mystery.
He was confused as to why Mary hadn’t been paying the reduced unit rates under the energy price guarantee earlier this year. Instead of paying roughly 34p per kw/h, she was paying about 46p per kw/h. Why?
As a reminder, the energy price guarantee was introduced last Autumn to cap the cost of average energy bills. The annual cap was £2500 per year, but unit rates refer to the specific price you’re paying per kilowatt hour – from April to July this year, the guarantee capped those average unit rates at 33.2p/kWh (pence per kilowatt hour) for electricity and 10.3p/kWh for gas.
Yes, these rates differ according to where you live and how you pay, but not dramatically so. Mary’s rates seemed way off. Pete didn’t understand, and nor did I.
Pete asked her energy supplier for an explanation. But after he sent five emails in total, pretty much asking the same question, he was still none the wiser.
I have seen the response from the customer service rep in question – he never gives a straightforward explanation as to why Mary’s unit rates are so much higher. I went from puzzled to intrigued.
So I contacted the energy provider in question to ask what was going on here. After an initial delay (i.e. my emails hitting their spam folder), I followed up again over the phone and they started looking into it.
Imagine my surprise when almost straightway, Mary receives a refund of £586, plus a goodwill gesture of £60!
False economy tariffs
Pete tells me that this is all because Mary was on an economy 7 (E7) tariff, a type of dual tariff where you pay more than the average rate for energy use during peak times, but far less during off-peak times.
This sounds like it could save you money if you’re prepared to do energy intensive activities at 10pm as opposed to 4pm. But Pete says this wasn’t relevant to Mary – her night use of energy was minimal, and the only reason why he had moved her across to an E7 deal is because it was the cheapest deal offered by her energy company.
However, when Mary’s tariff was due for renewal in February this year, Pete says she was only offered an e7 tariff even though a cheaper single rate tariff was available. The difference amounted to £586. Pete believes that his mum was being overcharged, and no-one would have known were it not for his tenacity and the eventual involvement of a journalist.
I am not the first to look more closely at whether E7 tariffs represent a good deal. The think tank Sustainability First published a damning presentation earlier this year, outlining how the price guarantee did not fix prices in the same way for E7 customers as it did for those on single rate tariffs. Indeed, changes to the existing energy price cap had actually raised costs for E7 customers.
Moreover, suppliers have exploited the situation to significantly change the difference between day and night charges, with customers potentially being overcharged by £100 per year. Sustainability First said the system was “open to abuse” and “creates a lottery”.
This could be a scandal that has flown under the radar amid the wider energy crisis. I have asked Mary’s energy supplier for their side of the story (when I receive it, I will name them) and I have also asked Ofgem for their thoughts. In the meantime, this raises serious questions.
- Have energy suppliers not been telling customers on dual tariffs about cheaper deals?
- If you’re on an E7 tariff, could you have been paying less on a single rate tariff?
- If so, could you now be entitled to a rebate like Mary?
I don’t think this is the last we’ll hear on this particular subject, so watch this space…
*Real name, but please note the main photo is a stock image not of Mary.
