Opinion: When energy brokers play dirty
We’re constantly being told to compare the market in our search for cheaper energy prices. But are we being prevented from making meaningful comparisons by a system that’s too complex, and a culture of truth-bending? Trident Utilities’ Darren Robertson investigates what he says is a disturbing - and even malicious - lack of clarity in energy offers.Company X is entitled to a Climate Change Levy rebate. They’re advised to switch to a green contract that will “save them money.” Instead, they lose their rebate and pay more for their energy.
Perhaps it’s an honest mistake on the part of the advisor. Perhaps it’s incompetence. Perhaps it’s something more sinister. I have met enough frustrated businesses to suspect the latter.Clients tell me they’ve been quoted energy prices which were ‘fully inclusive’ of all charges and taxes, but failed to include the Climate Change Levy or Renewables Obligation.
In other instances the supplier is inaccurately quoting these and other pass through costs, making them seem cheaper than they really are.In my experience, I estimate that where prices have been misquoted, the average level of discrepancy is 10 per cent. Given that many of the businesses with which I work have an annual energy expenditure of £500,000+, that’s more than a minor inaccuracy.
Is this a lack of clarity or duplicity?I think a market that’s inherently complicated carries with it the risk of error. As brokers and suppliers, it’s our role to make that market clear, so the client can make an informed choice that’s also the right choice. Simpler energy pricing has again been called for by both Ofgem and EDF in the past month and it’s essential to eliminating errors and bad decision-making.
But there are organisations which I believe are deliberately taking advantage of the fact that energy pricing isn’t easy.Certain companies have a ‘say anything to get the sale’ approach. With some, client benefit is such a distant second to maximising margin that they’ll reduce expected consumption levels in order to make the quote seem more attractive. I’ve even seen claims of special or unique arrangements with suppliers that simply don’t exist.
Make pricing clear and you remove the potential for clients to be misled. Yet until changes are made, the responsibility for ensuring all is as it seems rests with the client.If surcharges aren’t included, or they don’t look realistic, you should ask questions. If you don’t know what ‘realistic’ looks like, use the following table as a guide to costs that may form part of your quote:
Feed In Tariff 2-4% Renewables Obligation 10-12% Climate Change Levy / Green Uplift Charges 5-7% Transmission Charges & Losses 3-5% Distribution Charges & Losses 10-15% Other (AAHEDC, BSUOS etc) approx. 3%And if the energy market still seems too bewildering to enter alone, take a broker you trust with you. Darren Robertson is director of energy trading at Trident Utilities. An energy analyst and procurement specialist and member of the Society of Technical Analysts, Darren has more than 25 years’ experience working within the energy markets and has been directly involved in the development of innovative flexible contract terms, with energy suppliers for both large energy consumers and SMEs.