David Cameron made his bold claim in parliament during prime minister’s questions last week, apparently without the knowledge of his own energy department. As he was being hounded in the Commons by Labour leader Ed Miliband over chief whip Andrew Mitchell’s “plebs” rant at police, the half-formed promise of new energy legislation smacked of desperation.
Though the PM inadvertently dug himself another hole instead of clambering out of the one he was in, his slip-up and subsequent U-turn made the useful point of demonstrating that energy tariffs are too complex even for the government to understand. What hope, then, do consumers have of finding the best deal in the market?
It would be much easier if all the energy companies were compelled to release up-to-date personal consumption data to their customers online, so they can use third-party websites to help them find the cheapest tariff for their specific needs automatically. That’s what Midata was supposed to be encouraging, under the auspices of the government’s business department.
One of the key indicators of Midata’s success will be if every utility industry eventually gets its own version of Billmonitor.com, the price comparison site where mobile phone users can get personalised recommendations for the contract that best suits their actual phone usage.
Ironically, that site has been running with approval of the media and telecoms regulator Ofcom since 2009 – well before Midata started up. It works by requesting permission from customers to access the online bills their mobile operators already release.
It also requires the customer to give Billmonitor limited power of attorney to analyse the data – something that appears to be working in this case, but which surely isn’t the most desirable model for such complex services in the future.
Simpler solutions will depend on greater collaboration between competitors, because the data they release needs to be relatively standardised to be comparable. That will be anathema to the energy industry – and probably to anyone with a commercial bone in their body – but this is the inevitable endgame anyway. Being an early mover just makes your company look the most honest and confident in its pricing.
So far, of the big six energy providers, only Scottish Power has revealed its intentions to grant online data access to customers and third parties. The other energy companies will only be holding their own brand image to ransom if they don’t follow suit soon, and if they don’t make it simple to switch to new tariffs when customers are paying too much.
If the big six had given their attention to this earlier, they even might have spared the prime minister’s brand image too.