Energy bills transparency

Key findings

• Six in ten (61%) people saying they are not confident in knowing how much their household energy bill will increase by in October 2022 (prior to Ofgem & Government announcements).
• Only a quarter (28%) of the country could correctly identify what a ‘standing charge’ meant on their energy bill. 
• Two in five (41%) UK adults identified areas of a mock energy bill that they found confusing. ‘Kilowatts per hour (kWh)’ and ‘credit’ were the terms they struggled with the most as well as the calculations for electricity usage.
• People most want energy providers to include an email address (68%) and a telephone number (66%) as contact options  on their energy bills.

Consumer confidence was low for anticipating Autumn’s energy bill increase

The research explores consumers’ confidence in predicting their bills this autumn, and their understanding of bills in general to see how well positioned they are to manage their finances through the cost of living crisis, and whether more needs to be done to help.  

It’s important that consumers can understand and interpret their energy bills correctly, knowing how the price increases will impact them so they can work out how to balance their budgets. Our research reveals that consumer confidence was low with six in ten (61%) people saying they aren’t confident about how much their household energy bill will increase by October 2022.

Our research was conducted before the Ofgem announcement stating the October cap of £3,500 per year for an average bill, and before the more recent Government announcement of capping bills at an average of £2,500 per year. However, at the time of fieldwork, broadly accurate estimates of the proposed Ofgem cap were common public knowledge. The difficulty for consumers is in translating this average figure to their own bill particularly when rises have been so drastic.

If people aren’t confident what their energy bill increase will look like come Autumn, they may not be able to manage their money effectively to account for these increases. This lack of confidence hit lower income households harder, with those earning £21k or less being significantly more likely to say they aren’t confident of their future bills (65%) compared to those earning £55k or more (48%). Lower income households are most at risk of financial harm because they have less wriggle room and less disposable income compared to the higher earning households.

Standing charges are tricky for consumers to understand

Consumer confidence will no doubt be impacted by the confusion some people experience when reading their energy statements. A particular example of confusion comes from the complex charging structure, for instance, ‘standing charge’. We tested this term with respondents asking them if they knew what a standing charge was, and if so, what they thought it meant. 

Despite a small proportion of people knowing what a standing charge is, our research suggests the majority of consumers do not. Two-thirds (65%) of people admitted they either didn’t know or were unsure what a standing charge was on their energy bill.

Younger people are less likely to understand standing charges. Six in ten (58%) younger adults (aged 18-24) say they don’t know what a standing charge is and this falls for each older age band to a third (34%) of 65+ year olds. It suggests that whilst the older generations are more familiar with the term standing charge (possibly because they have experienced more years paying energy bills), there is a clear drop in knowledge that needs to be addressed for the younger generations, especially if they are to financially negotiate the expensive winter ahead. 

Only a quarter (28%) of the country could correctly state what a standing charge meant on their energy bill. 

People’s answers varied from simply “it’s to pay for the supply of electricity to your home”, to more comprehensive answers of “it’s a daily charge you have to pay at a set amount, irrespective of how much energy you use”. A few consumers went even further to express their discontent around paying the standing charge and they gave these views unprompted in the survey.

"So-called cost of supplying energy to my home! An absolute disgrace! Obscene on top of the rises!" 

"A fee that the energy company charges you for the privilege of having the meter on your property. Under the guise of [...] back door taxation. My standing charge exceeds my electricity bill!"

"A rip off! It’s supposedly a charge to maintain the network"

Some people are confused by ‘kWh’ and ‘credit’ terminology

Energy bills are loaded with terminology and calculations that some people struggle to understand. When presenting respondents with a mock energy bill, two in five (41%) UK adults identified areas of the bill that they find confusing. 

The terms that were particularly confusing were ‘kilowatts per hour’ (kWh), the use of ‘credit’, and the calculations for electricity used, unit rate and standing charge. Consumers expressed their frustrations for these terms.

"The KWH metrics and technical terms that are used are very confusing to understand how much you are using or spending"

"The kWh is too complicated to work out how much one kWh of electricity actually costs"

 "Credit wording is confusing. How can a direct debit be a credit?"

How do consumers want to get in touch with energy providers?

A useful step to help people seek clarity over their energy bills is to provide them with adequate contact details for the energy provider on the energy bill. People most want energy providers to include an email address (68%) and a telephone number (66%) on their energy bills. These two modes of communication came out on top, with other methods being website address (49%), internet chat (35%), QR codes (11%) and Facebook messenger (10%). 

"I really don’t like using smartphones for QR codes because [...] they make my life a lot more complicated than necessary"

Conclusion

Our research has shown that consumers can be confused by their energy bills and this is hindering their confidence in knowing what the price rises might mean for their energy bill come October. Action is needed to help consumers, especially those on the lowest incomes, to better understand, engage with and manage their energy bills this winter.