Written evidence submitted by energyhelpline (EPW0001)

Author: Mark Todd, Co-founder of energyhelpline.

Mark co-founded energyhelpline in 2001-3 with Jay Manek. Mark and Jay remain Directors and part owners of the company. Mark is the chief spokesperson of the company and regularly appears on TV and Radio as an energy expert.

EXECUTIVE SUMMMARY

• energyhelpline is one of the UK’s largest energy price comparison companies and offers whole of market price comparisons by default on its website and at its main call centre in Kent
• energyhelpline has been signed up to OFGEM Confidence Code and its forerunners for the last 12 years and has passed many regular audits. Our results table is ordered by price as laid down by the code and is not affected in any way by the level of commission we are paid. There is a clear link on the site explaining which suppliers pay us commission and which do not.
• energyhelpline has helped to organise around 2 million switches over the last 13 years; estimated customer savings are over £1 billion
• Suppliers work with us as we offer a low risk, low cost way of generating new customers. This has fuelled the emergence of smaller suppliers in recent years most of whom would not have been able to gain anywhere near the level of switches without price comparison
• We understand that one reason that this hearing has come about is due to accusations from the new collective switching organisation named the Big Deal. The accusations that they have made about us in a dossier they sent to Committee members are inaccurate and untrue. These are dealt with in more detail later (paras 26-32). Bizarrely this organisation has used our price comparison engine that we provide to suppliers to organise most of their switches over the last 6 months.
• The OFGEM Confidence Code audit for energy price comparison sites is probably the toughest test of any price comparison sector in the world. We know of no other sector in which price comparison companies like ourself at energyhelpline show the whole market by default whether we have a switching deal or not. No such service exists to our knowledge in mortgages, loans, credit cards, telecoms or insurance in the UK or outside.

Section A - Purpose of this document
 

1. To answer directly the questions posed as the purpose of the session by the Select Committee with regard to price comparison sites.
    

Section B - Origins of energyhelpline & Who we are
 

2. energyhelpline was founded in 2003 and was among the first energy price comparison websites in the UK. We have grown over the years and now employ over 100 staff in the UK including many call centre operatives that organise switches for customers at our call centre near Maidstone in Kent.
    
3. energyhelpline came out of switchandgive, launched in 2002, a comparison service that combined energy switching with charity fundraising. Each energy switch generated a free charity donation for the customer’s chosen charity and switchandgive has raised approximately £1/4 million for charities such as the NSPCC, Childline, The Royal British Legion and Christian Aid.
    
4. Over the last 13 years, energyhelpline and its partners have organised about 2 million household switches saving customers around £500 million in their first year after switching. Total customer savings are likely to be over £1 billion as customers tend to save in future years as well as Year 1.
    
5. energyhelpline is proud to be a whole of market price comparison service. We show all the deals in the market in our price comparisons from every supplier by default. We do not hide any tariffs.

C. TOPIC 1: The Role of Energy Price Comparison Websites and How They Operate
 

6. The role of energy price comparison websites is to make it easier for consumers to:
1. accurately compare prices from the 30+ UK energy companies
2. switch to their preferred deal.
3. gain independent advice such as the service ratings of companies and other such information about suppliers
    
7. Without a price comparison service, a customer would have to spend hours possibly days finding and visiting approximately 30 energy company websites to gain whole of market pricing information. Few would have the time or energy to do this. Instead with price comparison consumers can go to one website saving a lot of time.
    
8. At energyhelpline, we also believe it is important for some services to be available over the phone. At energyhelpline we run one of the largest inbound energy price comparison call centres in the UK. It is available on a freephone number and operates on extended hours till 8pm in the evenings each week day and 9am-5pm on Saturdays and Sundays. While all adult age groups switch, people 60 years+ and vulnerable groups in particular like to switch over the phone rather than online. Such services are crucial in reducing fuel poverty, hardship, and excess winter mortality.
    
9. There is a great deal of tariff complexity in the UK energy market. Each of the 30+ suppliers have up to 4 live tariffs to which customers can apply. But they can have 75 historic tariffs that customers are still on. All of these need to be covered in order to create a comprehensive energy price comparison engine. When Jay Manek and I founded the company in 2002 we worked for about 48 hours in a stretch with barely any sleep over one week end to get a fully up to date tariff database that covered the whole market. It was 7,000 rows down by 100 columns across. Now our energyhelpline database contains over 80,000 rows and we have a dedicated team of experts who are constantly updating and testing the tariff database. This is a considerable undertaking.
    
10. While the UK energy market is hugely complex through price comparison it is made simple for consumers. Personal accurate quotes are created for each household in minutes. The BBC timed switching on energyhelpline.com as taking around 4 minutes end to end. Customers can apply to 23 different suppliers and we hold all the application forms for each of these on our site so that no one needs to leave it to sign up to a tariff. Price comparison is nowadays the most popular form of switching – with more than half and possibly up to two thirds of switches coming this way.
     
11. By making switching easy price comparison sites are enabling the UK energy market to evolve much more rapidly than it otherwise would. Switching levels would be much lower if price comparison sites did not exist and small low cost suppliers would be gaining far fewer customers. In the last year we have seen record levels of customers (1.5 to 2 million) switching away from Big Six suppliers. The vast majority of these switches have come via price comparison sites.
     
12. At energyhelpline we are one of the biggest organisers of collectives under our own brand and with partners (eg. many major councils and newspapers). The beauty of price comparison, however, is that it is always on 365 days a year, 24 hours a day. At any point, if someone gets the urge to save, then they can in about 5 minutes. There is no need to register and then wait 3-4 weeks. We love collectives and will continue to do them into the future however given the huge breadth of choice and the immediate savings on price comparison it is likely to remain the main way to switch for most consumers into the future.

Section D - TOPIC 2: Transparency of commission received for different energy plans

13. The ordering of results on our price comparison site follows rules laid down by the regulator in the OFGEM Confidence code. As we adhere to the code our ordering is strictly by price. Whether we are paid more commission by one supplier over another makes no difference in the ordering of results. As an OFGEM accredited site we are audited quarterly by OFGEM to ensure that we are following the rules. Supplier commissions levels cannot thus alter our results table ordering.
     
14. At energyhelpline we also comply with the OFGEM Confidence code rules in terms of making customers aware that we receive commission from some suppliers for switch applications. We clearly show this with a link above our results table.
     
15. Whether we earn any commission or not also makes no difference to the way we display results as we show the whole energy market by default. The user decides the results they would like to see in terms of:

a)      Future Payment Method

b)      Type of Tariffs (eg. green, default is all)

c)      All Available Tariffs or ‘Tariffs we can switch you to today’ (default is All Available)

d)      Sorted by Price or Service Rating (default is Price)

We state from that link the following:

16. How do energyhelpline.com make money?

energyhelpline.com offers consumers a completely free and independent service to compare gas and electricity prices from all suppliers in the UK so that you can choose the right tariff for you at the best available tariff rates. We have agreed commission arrangements with all major suppliers and this means that not only can we offer our service free to you, but we often have special offers from suppliers that are not being offered through other channels, saving you even more.

The commission that we receive does not affect the way that the results are displayed on our results table – you can choose whether to list by price, supplier service rating or to choose Green tariffs.

energyhelpline.com does not  use advertising on the website or sell customer data to third parties.

Commission Agreements - Below is the list of supply companies energyhelpline.com has commission agreements with:

Gas:

Better Energy
British Gas (Scottish Gas & Nwy Prydain)
Co-operative Energy

EDF Energy

E.ON
Extra Energy
first:utility
Good Energy
Green Star Energy
npower

Ovo Energy
Sainsbury's Energy
Scottish & Southern Brands (Atlantic, Southern Electric, Scottish Hydro, SWALEC and M&S Energy)

ScottishPower
Spark Energy

Electricity:

British Gas (Scottish Gas & Nwy Prydain)
Co-operative Energy

Ecotricity
EDF Energy

E.ON
Extra Energy
first:utility
Good Energy
Green Energy UK
Green Star Energy
iSupplyEnergy
LoCO2 Energy
npower

Ovo Energy

Sainsbury's Energy
Scottish & Southern Brands (Atlantic, Southern Electric, Scottish Hydro, SWALEC and M&S Energy)

ScottishPower
Spark Energy

------------ENDS--------------

17 We understand that one proposal has been to publish all energy supplier commissions on a price comparison site. At energyhelpline we don’t believe that such a practise would be helpful to consumers as it is likely to lead to the following:

a)      Energy supplier’s forcing down price comparison commission levels meaning that:

i)        smaller comparison sites can no longer operate and go out of business restricting choice

ii)      switching call centres closing or operating on restricted hours particularly impacting older age groups and vulnerable groups who like to use the phone – call centres due to the staffing required are more costly to run than a website

iii)     price comparison services become more stripped down for example no longer offering customer services departments to help customers switches going live

b)      Confusion among some customers as to whether the commission level will be added their bill in some way by the supplier or comparison site

18 Currently the level of commission that energyhelpline receives from a supplier has no impact on the service that we offer:

1. Whether we receive one or not we let customers know about all deals applicable to them by default.
2. And between the deals for which we receive commission we do not favour one over another in our presentation of results on the site or over the phone. They are listed by price or service rating as requested by the customer

19 One suggestion has also been that price comparison services ought to charge the customer not the supplier. We do not believe this would work as price comparison customers are very cost sensitive and they would then just use us to get a comparison and then go direct to the supplier to switch for free.

20 Energy price comparison sites provide a low cost, low risk source of switches for suppliers. If suppliers want to gain customers outside of price comparison websites they must engage in generally more costly and risky marketing campaigns to promote their own company.

21 For these reasons we believe that publishing all energy supplier commissions on a price comparison site would damage switching and be against the interests of customers.
 

Section E - Topic 3: Consumer trust in energy price comparison websites

22 Trust in energy comparison sites is very high. This is borne out by very low levels of complaints from energy price comparison customers.

23 Consumer trust in energy price comparison websites and their call centres is very important. Without trust, switching rates will almost certainly drop and so will then the amount of savings customers make.

24 In the past there were many more switches occurring in the energy market however around half or 2.5 million of them were from doorstep sales - a Which? investigation showed that more than half of customers switching on the doorstep were not saving at all.

25 At energyhelpline we have helped to organise over 2 million switches over the last 12 years saving customers around £500 million pounds in their first year of switching. Overall savings for customers taking into account future years in which they are likely to save is estimated at well over £1 billion.

26 Recent accusations by The Big Deal have damaged customer’s trust levels. The accusations particularly in the media have tended to be sweeping and inaccurate as not all services are as they have painted. Some of the accusations about energyhelpline have been plain wrong for example:

1. they accused us of hiding tariffs something that we have never done
2. they also stated that we had a yes / no answer to a filter question around whether a customer wanted to see ‘Tariffs that they could switch to today’. We understand such a question can be confusing to customers. This is something that we have never had.
3. Instead we have a question that is very simple to understand:
   ‘Filter my results to show :
   - Tariffs we can switch you to today?
   - All available tariffs?’
   The default is to all available tariffs. Customers therefore see the whole market by default and our language is straight forward. We operate the same policy over the phone at our call centre.

27 We have never had a complaint from a customer about this wording and our wording has been developed following feedback from OFGEM.

28 The accusations from the Big Deal are interesting when put in the light of what their founder Henry de Zoete former special advisor to Education Secretary Michael Gove said about how he intended to grow the company in an interview with Andrew Neather published in the Evening Standard 11 April 2014

29 “There’s a broader anti-politics thing going on and that’s what we’re trying to tap into,” says de Zoete. “I think The Big Deal could harness that anger and get people involved in politics in a totally different way. Perhaps the ballot box has failed to serve them in that way.”

30 It appears that The Big Deal have tried to harness anger as a marketing tool and create an anti price comparison movement in recent months. This is in order to promote their own collective switching business that uses energyhelpline’s price comparison engine to organise switches via Extra Energy and Green Star (energyhelpline power these suppliers price comparisons). So they criticise price comparison services then use us to organise their switches. The Big Deal would probably not be able to exist without a price comparison service like ourself as they would not be able to finance the creation of a whole of market price comparison engine. Today this would probably cost millions of pounds to build from scratch.

31 The Big Deal’s track record on whole of market comparisons is not great, their summer collective switch promoted just one of about 80 available tariffs, a tariff that was only 5th cheapest in the market yet to the question ‘Is this deal unique? Is it the cheapest on the market?’ They answer in their own FAQs (see overleaf) ‘Yes and Yes’. They then use flawed logic to explain why a 2 year tariff would be cheapest in the long run. Logic that only works if the cheapest tariffs are rising in price, which they are not.

32 It a real shame that the Big Deal have chosen a negative approach typical of the darker arts of political campaigning to promote their business rather than a positive agenda. Comments from them do need to be checked for veracity as they are at times incorrect.

SECTION F - Arrangements for oversight of these websites, for example through the ‘Confidence Code’, a Code of Practice that governs independent energy price comparison sites.

33 At energyhelpline we have been members of the Ofgem Confidence Code and its forerunners for 12 years since 2003. We think it is an important impartial test of a price comparison service showing that it follows detailed rules to offer a service that is:

1. impartial
2. accurate
3. and comprehensive

34 We also note that no such test exists for energy supplier websites and they are therefore not audited every quarter to check that they are accurate in their calculations they offer customers.

35 The Confidence Code audit is probably the toughest test of any price comparison sector in the world. We know of no other sector in which price comparison companies like ourself at energyhelpline show the whole market by default whether we have a deal or not. No such service exists to our knowledge in mortgages, loans, credit cards, telecoms or insurance.

January 2015

Author: Mark Todd, co-founder, energyhelpline