Older people get raw deals

Why do older people get the worse deals?

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I believe that older people get the worse energy deals simply because I know my parents are in this category.

I had an interesting discussion last weekend with my parents who are in their seventies.  I suggested to them that they should use The Comparison Centre’s new domestic energy platform in order to see if they could save money on their energy bills.

Their answer surprised me somewhat: “We’re happy with our current supplier”.  “Who are you with” I asked.  “The Hydro Electric Board, we have been with them for over 25years “.  Now there were two alarm bells ringing in my head at this point. Firstly the Hydro Electric Board doesn’t exist and there has not been any “Boards” in the UK since privatisation of the electricity industry in 1990.  Secondly, if my parents haven’t changed their supply for 25 years then they definitely will not be on the best deal available in the market. I feel remise not helping them before now to consider their options.

I explained that the market has long since changed and that the “Hydro Electric Board” no longer exists and that if they have been on the same deal for the past 25 years then they probably aren’t getting the best deal in the market.  Even knowing this, my parents insisted that they were still happy with their current supply. The only issue that they did have, however, was that they wanted to pay by Direct Debit but can’t get through to the Board’s customer services team to make the change.

Here was my parents saying that they were happy to be supplied by a “Board” that doesn’t exists, by a company that has them paying over the phone rather than direct debit (which is their preferred way to pay) and who was more than likely charging them way above the rates that other suppliers could possibly supply.

“Don’t you a least want to know what you can save if you did switch?”  They did so I asked my mother if she could find her latest bill.

The first thing that jumped out at me was that they were on an Economy 7 tariff which was strange given that they have LPG heating and so use 90% of their electricity during the high price period and 10% during the off peak period.  The next thing I noticed was that given the electricity split they were paying on average 20p per kWh for your electricity. Now I only pay 15p per kWh and I use a lot less electricity than my parents.

“OK” I said lets run the numbers through The Comparison Centre platform and see what you can save. The good news was that if they elected to pay by direct debit, they would save £352 per year simply by switching to another energy supplier! “What do you think about that?”

Surprisingly my parents didn’t think that this was much of a saving. They had logically calculated that this saving was only equal to them buying 2 coffees a week (I obviously should have used #coffeeconomics rather than money to sell my point).

“Yes your right but surely it is better to have £352 in your pocket to buy your coffee than to leave that money with an energy supplier to add to their profits?”

The logic they gave me for NOT changing was that it was “to much hassle to change electricity supplier” and “that they didn’t want the lights going off.”

I am not sure why they thought the lights would go off.  I said “the only difference you would experience is that you will pay less for the same electricity that is used by your electric appliances in the house, there will be no other difference as to where the electrons come from or who maintains the lines to you house.”

At this point I could tell they were not for budging.  I could tell they thought I was doing a sales pitch.  The reality was that as an energy guy who has been in the energy industry for over 30 years I was surprised that my own parents wouldn’t take my advice and switch supplier to save some money.

This discussion with my parents made me realise that the older generation are probably the ones that get the raw deals.  They don’t want to change supplier because they don’t want the hassle or worry of things not being as they are now, so they are happy to accept the status quo and therein keep paying their bills which may be based on a tariff that sees them paying hundreds of pounds more than they need to pay.

Perhaps what should happen, rather than having a price cap or forcing suppliers to put people on their best deal (which may again not be the best deal in the market), is that the suppliers should be forced to price match against the best deal on the market for those customers that are over 65 years of age and who have not switched in the past 5 years.  By giving people that comfort of knowing that there will be no disruption to their energy supply and that they will automatically get the best deal on the market, they (the incumbent supplier) will likely gain greater customer loyalty, not as a default due to inaction by a given demographic but rather as a choice from people who appreciate being looked after as they get older.

If you do want to check to see how much you can save or you want to help your parents or grandparents see how much they can save then I suggest you have a look at The Comparison Centre. What is the worse that can happen?

 

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