Energy firms are failing to adequately explain tariff comparison rates according a new study

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A study into Ofgem’s Tariff Comparison Rate (TCR) has sparked criticism from industry experts who claim that more needs to be done to help consumers understand the complex pricing behind energy tariffs.

The TCR was introduced by the energy industry watchdog as a measure to help simplify the switching process, however previous research has indicated that the tool has enabled only three in 10 consumers to find the cheapest deal on the market for them.

The study goes on to identify 13 suppliers who responded inadequately when asked to explain the TCR to consumers. The survey states that of the 78 calls that were made to energy suppliers, only four gave adequate instructions when asked how to use the TCR.

There is a huge importance being placed on the clear explanation of the TCR because it works on an assumed medium usage, which means the indicated cheapest deal may not apply to everyone.

In response to the findings, an Ofgem spokesman said: “Ofgem has already told suppliers that they must improve their customer service, so they have to make sure that their staff can properly explain the tariff comparison rate to their customers.

“All suppliers are required to provide explanations of the rates on their websites. And all suppliers must also provide tariff comparison rates on all communications which are regularly sent to customers, such as bills and annual statements. We are monitoring compliance with these reforms closely.”

Scott Byrom energy expert at had this to say;

“Despite Ofgem’s best endeavours under the Retail Market Review earlier this year, it’s clear that customers aren’t getting to grips with the Tariff Comparison Rate (TCR) and it’s easy to understand why.

“Complexity is the biggest barrier to an engaged and active energy market and so the industry has to work harder to simplify the structure of our energy bills.

“If the market is to progress, Ofgem should look to standardise the “standing charge” at a fixed rate across the market, remove or embed discounts in the unit rate and enable customers to compare purely based on pence per kWh.”

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