Get your lovely gas here, Mister

by Ken Frere

Revised tariffs

Many of the tariffs set out in our table in the last issue of Consumer News  have been revised. Here are the current (April) tariffs for Southern England, for payment each quarter (Table A), or monthly by direct debit (Table B). In each column we have shown the Total Annual Charge in red if it is in the lowest quartile of charges for that level of gas consumption. For example, in the 1300 Units column the range of charges is from £534 to £653; charges of £563 or less are shown in red. (see on-screen key for other highlighting)

Other factors Although least cost is important there are other factors, such as quality of service, which you will want to take into account when choosing a supplier. In some cases the companies are offering additional benefits such as Air Miles, Clubcard points and so on, which you are best placed to value.

Choice is not easy

None of the suppliers is consistently the cheapest for all users. There is most variation in the charges for low-volume users, and two of the companies which do not set a standing charge are now among the most expensive for low-volume users. All this reinforces the key point we made in our previous article - you must have as good an idea as possible of your likely consumption of gas, then work out the cost of that for each of the tariffs on offer.

As the level of usage increases there are fewer fluctuations, and most of the companies creep into the lowest quartile of charges (those printed in bold). For high volume users (1300 units or more) the rank order of costs settles down. If you know the total of your 1997 bills from British Gas you can enter either Table A or Table B at about the right point, then look first at the companies whose charges are set out in bold. The tariffs shown are believed to be accurate at the middle of April 98, but they can still change. When you make your own calculations, don’t forget to add VAT at 5% to the tariff rates.

One company (SAGA, with limited membership) acts as a broker and charges the same as or less than the supplier (Northern Electric) which will bill you. It is also consistently among the lowest three for charges at the low, average and high levels of usage. British Gas appears more often than any other company in the highest bracket for prices, except for low-volume users paying by direct debit.

British Fuels-Gas has a six-level price structure which is difficult to compare with those of other companies. The BF-G variable tariff seems to charge you the same for either (say) 3999 or 5567 kWh of gas supplied (that’s 39% more). At the top end of the scale it looks as though 44999 kWh will cost you nearly £38 more than 45000 kWh (yes, one kWh more!). In practice that won’t happen, and you may win or lose. The company decides what price band to put you in (based on your last year’s consumption) and you commit yourself to a contract in that price band. You will pay for whatever gas you use at that price, and you won’t get a rebate in the last quarter if you should have been put into a cheaper band. Nor, to be fair, will you be asked to pay more if you should have been put into a lower band. In either case your banding will be revised for the following year, but to make comparisons with other companies this year you must know how much gas you used in 1997.

Direct Debits cheaper but there are risks

All the direct debit tariffs are cheaper, but they place the onus on you to identify and correct errors. Your bank, building society or credit card company may penalise you severely if they return a direct debit unpaid because there are insufficient funds in your account. The discounts for payment by direct debit (included in Table B) vary from 4% to an astonishing maximum 47.7% for the standing charge and from 2.1% to 10% for unit charges. Anything less than 3.0% does not seem to us to be a fair share of the savings companies derive from loading you with the risks of error and the burden of correction.

The revised tariffs are generally more straightforward in setting out real prices, rather than price comparisons (which should be ignored). Southern, however, has no prices in its publicity; you have to look in the small print of the contract to find them. In our view this is unacceptable. Southern’s discount for paying by direct debit is 7.3% for the standing charge and 5.84% for unit charges; this makes an interesting contrast with the 2.4% discount offered to its customers for electricity. Sterling sent one batch of publicity with no price statement at all, though this was perhaps an error.

None of the companies supplying gas is (yet) offering a dual-fuel tariff. When the electricity market is deregulated that will change, and prices could well be lower for a single energy supplier. Electricity prices vary across the country, so you won’t be able to guess at your consumption from last year’s bills. Do read your gas and electricity meters every quarter and record the figures. You will need them when we print gas and electricity tariffs in six month’s time. Watch this space.

Ken Frere

TABLE A

TABLE B

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